Correlation Between Zuger Kantonalbank and Basler Kantonalbank

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

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

Diversification Opportunities for Zuger Kantonalbank and Basler Kantonalbank

0.88

Correlation Coefficient

Zuger Kantonalbank  Basler Kantonalbank

Very poor diversification

The 3 months correlation between Zuger and Basler is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Zuger Kantonalbank and Basler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basler Kantonalbank and Zuger Kantonalbank 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 Zuger Kantonalbank are associated (or correlated) with Basler Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basler Kantonalbank has no effect on the direction of Zuger Kantonalbank i.e., Zuger Kantonalbank and Basler Kantonalbank go up and down completely randomly.

Pair Corralation between Zuger Kantonalbank and Basler Kantonalbank

Assuming the 90 days trading horizon Zuger Kantonalbank is expected to generate 1.32 times less return on investment than Basler Kantonalbank. But when comparing it to its historical volatility, Zuger Kantonalbank is 1.23 times less risky than Basler Kantonalbank. It trades about 0.06 of its potential returns per unit of risk. Basler Kantonalbank is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,066  in Basler Kantonalbank on December 3, 2024 and sell it today you would earn a total of  1,794  from holding Basler Kantonalbank or generate 29.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.59%
Values	Daily Returns

Zuger Kantonalbank  vs.  Basler Kantonalbank

Zuger Kantonalbank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zuger Kantonalbank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Zuger Kantonalbank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Basler Kantonalbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Basler Kantonalbank are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Basler Kantonalbank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zuger Kantonalbank and Basler Kantonalbank

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

The idea behind Zuger Kantonalbank and Basler Kantonalbank 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.