Correlation Between Schweizerische Nationalbank and Chemtrade Logistics

Can any of the company-specific risk be diversified away by investing in both Schweizerische Nationalbank and Chemtrade Logistics 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 Chemtrade Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Schweizerische Nationalbank and Chemtrade Logistics Income, you can compare the effects of market volatilities on Schweizerische Nationalbank and Chemtrade Logistics 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 Chemtrade Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schweizerische Nationalbank and Chemtrade Logistics.

Diversification Opportunities for Schweizerische Nationalbank and Chemtrade Logistics

0.25

Correlation Coefficient

Schweizerische Nationalbank  Chemtrade Logistics

Modest diversification

The 3 months correlation between Schweizerische and Chemtrade is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and Chemtrade Logistics Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemtrade Logistics 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 Chemtrade Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemtrade Logistics has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and Chemtrade Logistics go up and down completely randomly.

Pair Corralation between Schweizerische Nationalbank and Chemtrade Logistics

Assuming the 90 days horizon Schweizerische Nationalbank is expected to generate 0.56 times more return on investment than Chemtrade Logistics. However, Schweizerische Nationalbank is 1.77 times less risky than Chemtrade Logistics. It trades about 0.34 of its potential returns per unit of risk. Chemtrade Logistics Income is currently generating about -0.12 per unit of risk. If you would invest  353,738  in Schweizerische Nationalbank on October 22, 2024 and sell it today you would earn a total of  23,790  from holding Schweizerische Nationalbank or generate 6.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Schweizerische Nationalbank  vs.  Chemtrade Logistics Income

Schweizerische Nationalbank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schweizerische Nationalbank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Chemtrade Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Schweizerische Nationalbank and Chemtrade Logistics

The main advantage of trading using opposite Schweizerische Nationalbank and Chemtrade Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schweizerische Nationalbank position performs unexpectedly, Chemtrade Logistics 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 Chemtrade Logistics will offset losses from the drop in Chemtrade Logistics' long position.

The idea behind Schweizerische Nationalbank and Chemtrade Logistics Income 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.