Correlation Between EFG International and Leonteq AG

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

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

Diversification Opportunities for EFG International and Leonteq AG

-0.47

Correlation Coefficient

EFG International  Leonteq AG

Very good diversification

The 3 months correlation between EFG and Leonteq is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding EFG International AG and Leonteq AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leonteq AG and EFG International 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 EFG International AG are associated (or correlated) with Leonteq AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leonteq AG has no effect on the direction of EFG International i.e., EFG International and Leonteq AG go up and down completely randomly.

Pair Corralation between EFG International and Leonteq AG

Assuming the 90 days trading horizon EFG International AG is expected to generate 0.7 times more return on investment than Leonteq AG. However, EFG International AG is 1.44 times less risky than Leonteq AG. It trades about 0.06 of its potential returns per unit of risk. Leonteq AG is currently generating about -0.21 per unit of risk. If you would invest  1,174  in EFG International AG on September 5, 2024 and sell it today you would earn a total of  32.00  from holding EFG International AG or generate 2.73% return on investment over 90 days.

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

EFG International AG  vs.  Leonteq AG

EFG International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EFG International AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, EFG International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Leonteq AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EFG International and Leonteq AG

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

The idea behind EFG International AG and Leonteq AG 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.