Correlation Between Skandinaviska Enskilda and Rolls Royce
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and Rolls Royce 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 Skandinaviska Enskilda and Rolls Royce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skandinaviska Enskilda Banken and Rolls Royce Holdings PLC, you can compare the effects of market volatilities on Skandinaviska Enskilda and Rolls Royce 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 Skandinaviska Enskilda with a short position of Rolls Royce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Rolls Royce.
Diversification Opportunities for Skandinaviska Enskilda and Rolls Royce
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Skandinaviska and Rolls is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Rolls Royce Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolls Royce Holdings and Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken are associated (or correlated) with Rolls Royce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolls Royce Holdings has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Rolls Royce go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Rolls Royce
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to under-perform the Rolls Royce. But the stock apears to be less risky and, when comparing its historical volatility, Skandinaviska Enskilda Banken is 1.43 times less risky than Rolls Royce. The stock trades about 0.0 of its potential returns per unit of risk. The Rolls Royce Holdings PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 36,910 in Rolls Royce Holdings PLC on August 27, 2024 and sell it today you would earn a total of 17,650 from holding Rolls Royce Holdings PLC or generate 47.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.95% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. Rolls Royce Holdings PLC
Performance |
| Timeline |
| Skandinaviska Enskilda |
| Rolls Royce Holdings |
Skandinaviska Enskilda and Rolls Royce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and Rolls Royce
The main advantage of trading using opposite Skandinaviska Enskilda and Rolls Royce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, Rolls Royce 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 Rolls Royce will offset losses from the drop in Rolls Royce's long position.| Skandinaviska Enskilda vs. Samsung Electronics Co | Skandinaviska Enskilda vs. Samsung Electronics Co | Skandinaviska Enskilda vs. Hyundai Motor | Skandinaviska Enskilda vs. Toyota Motor Corp |
| Rolls Royce vs. Air Products Chemicals | Rolls Royce vs. International Biotechnology Trust | Rolls Royce vs. Verizon Communications | Rolls Royce vs. Zegona Communications Plc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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