Correlation Between Schweizerische Nationalbank and American Green

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

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

Diversification Opportunities for Schweizerische Nationalbank and American Green

-0.58

Correlation Coefficient

Schweizerische Nationalbank  American Green

Excellent diversification

The 3 months correlation between Schweizerische and American is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and American Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Green 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 American Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Green has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and American Green go up and down completely randomly.

Pair Corralation between Schweizerische Nationalbank and American Green

Assuming the 90 days horizon Schweizerische Nationalbank is expected to under-perform the American Green. But the pink sheet apears to be less risky and, when comparing its historical volatility, Schweizerische Nationalbank is 10.76 times less risky than American Green. The pink sheet trades about -0.13 of its potential returns per unit of risk. The American Green is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.04  in American Green on September 12, 2024 and sell it today you would earn a total of  0.03  from holding American Green or generate 75.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Schweizerische Nationalbank  vs.  American Green

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

American Green

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Green are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, American Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schweizerische Nationalbank and American Green

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

The idea behind Schweizerische Nationalbank and American Green 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.