Correlation Between Baloise Holding and IShares Core

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

By analyzing existing cross correlation between Baloise Holding AG and iShares Core SP, you can compare the effects of market volatilities on Baloise Holding and IShares Core 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 Baloise Holding with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baloise Holding and IShares Core.

Diversification Opportunities for Baloise Holding and IShares Core

-0.31

Correlation Coefficient

Baloise Holding  IShares Core

Very good diversification

The 3 months correlation between Baloise and IShares is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and Baloise 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 Baloise Holding AG are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Baloise Holding i.e., Baloise Holding and IShares Core go up and down completely randomly.

Pair Corralation between Baloise Holding and IShares Core

Assuming the 90 days trading horizon Baloise Holding AG is expected to under-perform the IShares Core. In addition to that, Baloise Holding is 1.33 times more volatile than iShares Core SP. It trades about -0.01 of its total potential returns per unit of risk. iShares Core SP is currently generating about 0.21 per unit of volatility. If you would invest  59,470  in iShares Core SP on September 13, 2024 and sell it today you would earn a total of  5,020  from holding iShares Core SP or generate 8.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Baloise Holding AG  vs.  iShares Core SP

Baloise Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baloise Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Baloise Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares Core SP

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Baloise Holding and IShares Core

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

The idea behind Baloise Holding AG and iShares Core SP 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.