Correlation Between Vontobel Holding and Swissquote Group

Can any of the company-specific risk be diversified away by investing in both Vontobel Holding and Swissquote Group 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 Vontobel Holding and Swissquote Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vontobel Holding and Swissquote Group Holding, you can compare the effects of market volatilities on Vontobel Holding and Swissquote Group 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 Vontobel Holding with a short position of Swissquote Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vontobel Holding and Swissquote Group.

Diversification Opportunities for Vontobel Holding and Swissquote Group

0.74

Correlation Coefficient

Vontobel Holding  Swissquote Group

Poor diversification

The 3 months correlation between Vontobel and Swissquote is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vontobel Holding and Swissquote Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swissquote Group Holding and Vontobel Holding 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 Vontobel Holding are associated (or correlated) with Swissquote Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swissquote Group Holding has no effect on the direction of Vontobel Holding i.e., Vontobel Holding and Swissquote Group go up and down completely randomly.

Pair Corralation between Vontobel Holding and Swissquote Group

Assuming the 90 days trading horizon Vontobel Holding is expected to generate 1.56 times less return on investment than Swissquote Group. But when comparing it to its historical volatility, Vontobel Holding is 2.06 times less risky than Swissquote Group. It trades about 0.26 of its potential returns per unit of risk. Swissquote Group Holding is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  30,320  in Swissquote Group Holding on October 20, 2024 and sell it today you would earn a total of  6,220  from holding Swissquote Group Holding or generate 20.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Vontobel Holding  vs.  Swissquote Group Holding

Vontobel Holding

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vontobel Holding are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Vontobel Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Swissquote Group Holding

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swissquote Group Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Swissquote Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vontobel Holding and Swissquote Group

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

The idea behind Vontobel Holding and Swissquote Group Holding 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.