Correlation Between Baloise Holding and IShares SP

Can any of the company-specific risk be diversified away by investing in both Baloise Holding and IShares SP 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 SP 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 SP 500, you can compare the effects of market volatilities on Baloise Holding and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baloise Holding and IShares SP.

Diversification Opportunities for Baloise Holding and IShares SP

0.63

Correlation Coefficient

Baloise Holding  IShares SP

Poor diversification

The 3 months correlation between Baloise and IShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of Baloise Holding i.e., Baloise Holding and IShares SP go up and down completely randomly.

Pair Corralation between Baloise Holding and IShares SP

Assuming the 90 days trading horizon Baloise Holding AG is expected to generate 1.09 times more return on investment than IShares SP. However, Baloise Holding is 1.09 times more volatile than iShares SP 500. It trades about -0.08 of its potential returns per unit of risk. iShares SP 500 is currently generating about -0.22 per unit of risk. If you would invest  16,970  in Baloise Holding AG on September 14, 2024 and sell it today you would lose (670.00) from holding Baloise Holding AG or give up 3.95% of portfolio value over 90 days.

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

Baloise Holding AG  vs.  iShares SP 500

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 SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Baloise Holding and IShares SP

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

The idea behind Baloise Holding AG and iShares SP 500 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.