Correlation Between Baloise Holding and Xtrackers MSCI

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

Diversification Opportunities for Baloise Holding and Xtrackers MSCI

-0.07

Correlation Coefficient

Baloise Holding  Xtrackers MSCI

Good diversification

The 3 months correlation between Baloise and Xtrackers is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and Xtrackers MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI China 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI China has no effect on the direction of Baloise Holding i.e., Baloise Holding and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between Baloise Holding and Xtrackers MSCI

Assuming the 90 days trading horizon Baloise Holding AG is expected to under-perform the Xtrackers MSCI. But the stock apears to be less risky and, when comparing its historical volatility, Baloise Holding AG is 4.28 times less risky than Xtrackers MSCI. The stock trades about -0.07 of its potential returns per unit of risk. The Xtrackers MSCI China is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,087  in Xtrackers MSCI China on September 14, 2024 and sell it today you would earn a total of  311.00  from holding Xtrackers MSCI China or generate 28.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.31%
Values	Daily Returns

Baloise Holding AG  vs.  Xtrackers MSCI China

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.

Xtrackers MSCI China

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI China are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Xtrackers MSCI showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baloise Holding and Xtrackers MSCI

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

The idea behind Baloise Holding AG and Xtrackers MSCI China 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.