Correlation Between Schweizerische Nationalbank and Aalberts

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

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

Diversification Opportunities for Schweizerische Nationalbank and Aalberts

-0.69

Correlation Coefficient

Schweizerische Nationalbank  Aalberts

Excellent diversification

The 3 months correlation between Schweizerische and Aalberts is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Schweizerische Nationalbank and Aalberts NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts NV 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 Aalberts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalberts NV has no effect on the direction of Schweizerische Nationalbank i.e., Schweizerische Nationalbank and Aalberts go up and down completely randomly.

Pair Corralation between Schweizerische Nationalbank and Aalberts

Assuming the 90 days horizon Schweizerische Nationalbank is expected to generate 3.03 times more return on investment than Aalberts. However, Schweizerische Nationalbank is 3.03 times more volatile than Aalberts NV. It trades about 0.18 of its potential returns per unit of risk. Aalberts NV is currently generating about -0.36 per unit of risk. If you would invest  399,297  in Schweizerische Nationalbank on February 5, 2024 and sell it today you would earn a total of  50,703  from holding Schweizerische Nationalbank or generate 12.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Schweizerische Nationalbank  vs.  Aalberts NV

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 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.

Aalberts NV

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Schweizerische Nationalbank and Aalberts

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

The idea behind Schweizerische Nationalbank and Aalberts NV 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.