Correlation Between Luzerner Kantonalbank and Glarner Kantonalbank

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

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

Diversification Opportunities for Luzerner Kantonalbank and Glarner Kantonalbank

0.74

Correlation Coefficient

Luzerner Kantonalbank  Glarner Kantonalbank

Poor diversification

The 3 months correlation between Luzerner and Glarner is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Luzerner Kantonalbank AG and Glarner Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glarner Kantonalbank and Luzerner Kantonalbank 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 Luzerner Kantonalbank AG are associated (or correlated) with Glarner Kantonalbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glarner Kantonalbank has no effect on the direction of Luzerner Kantonalbank i.e., Luzerner Kantonalbank and Glarner Kantonalbank go up and down completely randomly.

Pair Corralation between Luzerner Kantonalbank and Glarner Kantonalbank

Assuming the 90 days trading horizon Luzerner Kantonalbank AG is expected to generate 0.9 times more return on investment than Glarner Kantonalbank. However, Luzerner Kantonalbank AG is 1.12 times less risky than Glarner Kantonalbank. It trades about 0.08 of its potential returns per unit of risk. Glarner Kantonalbank is currently generating about 0.01 per unit of risk. If you would invest  6,170  in Luzerner Kantonalbank AG on September 12, 2024 and sell it today you would earn a total of  230.00  from holding Luzerner Kantonalbank AG or generate 3.73% return on investment over 90 days.

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

Luzerner Kantonalbank AG  vs.  Glarner Kantonalbank

Luzerner Kantonalbank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Luzerner Kantonalbank AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Luzerner Kantonalbank is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Glarner Kantonalbank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Glarner Kantonalbank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Glarner Kantonalbank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Luzerner Kantonalbank and Glarner Kantonalbank

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

The idea behind Luzerner Kantonalbank AG and Glarner Kantonalbank 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.