Correlation Between Swiss Life and WisdomTree Investments

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

By analyzing existing cross correlation between Swiss Life Holding and WisdomTree Investments, you can compare the effects of market volatilities on Swiss Life and WisdomTree Investments 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 Swiss Life with a short position of WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Life and WisdomTree Investments.

Diversification Opportunities for Swiss Life and WisdomTree Investments

0.58

Correlation Coefficient

Swiss Life  WisdomTree Investments

Very weak diversification

The 3 months correlation between Swiss and WisdomTree is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and Swiss Life 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 Swiss Life Holding are associated (or correlated) with WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of Swiss Life i.e., Swiss Life and WisdomTree Investments go up and down completely randomly.

Pair Corralation between Swiss Life and WisdomTree Investments

Assuming the 90 days trading horizon Swiss Life is expected to generate 10.97 times less return on investment than WisdomTree Investments. But when comparing it to its historical volatility, Swiss Life Holding is 1.18 times less risky than WisdomTree Investments. It trades about 0.02 of its potential returns per unit of risk. WisdomTree Investments is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  837.00  in WisdomTree Investments on September 13, 2024 and sell it today you would earn a total of  213.00  from holding WisdomTree Investments or generate 25.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Swiss Life Holding  vs.  WisdomTree Investments

Swiss Life Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Swiss Life is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

WisdomTree Investments

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Investments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WisdomTree Investments reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Swiss Life and WisdomTree Investments

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

The idea behind Swiss Life Holding and WisdomTree Investments 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.