Correlation Between Schweizerische Nationalbank and Brixton Metals

Can any of the company-specific risk be diversified away by investing in both Schweizerische Nationalbank and Brixton Metals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Schweizerische Nationalbank and Brixton Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Schweizerische Nationalbank and Brixton Metals, you can compare the effects of market volatilities on Schweizerische Nationalbank and Brixton Metals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Schweizerische Nationalbank with a short position of Brixton Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweizerische Nationalbank and Brixton Metals.

Diversification Opportunities for Schweizerische Nationalbank and Brixton Metals

0.04

Correlation Coefficient

Schweizerische Nationalbank  Brixton Metals

Significant diversification

The 3 months correlation between Schweizerische and Brixton is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and Brixton Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixton Metals and Schweizerische Nationalbank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Schweizerische Nationalbank are associated (or correlated) with Brixton Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixton Metals has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and Brixton Metals go up and down completely randomly.

Pair Corralation between Schweizerische Nationalbank and Brixton Metals

Assuming the 90 days horizon Schweizerische Nationalbank is expected to generate 18.5 times less return on investment than Brixton Metals. But when comparing it to its historical volatility, Schweizerische Nationalbank is 3.2 times less risky than Brixton Metals. It trades about 0.02 of its potential returns per unit of risk. Brixton Metals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4.70  in Brixton Metals on November 28, 2024 and sell it today you would earn a total of  1.60  from holding Brixton Metals or generate 34.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Schweizerische Nationalbank  vs.  Brixton Metals

Schweizerische Nationalbank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schweizerische Nationalbank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Schweizerische Nationalbank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Brixton Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brixton Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brixton Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schweizerische Nationalbank and Brixton Metals

The main advantage of trading using opposite Schweizerische Nationalbank and Brixton Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweizerische Nationalbank position performs unexpectedly, Brixton Metals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brixton Metals will offset losses from the drop in Brixton Metals' long position.

The idea behind Schweizerische Nationalbank and Brixton Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.