Correlation Between Royal Bank and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Scandic Hotels 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 Royal Bank and Scandic Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Bank of and Scandic Hotels Group, you can compare the effects of market volatilities on Royal Bank and Scandic Hotels 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 Royal Bank with a short position of Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Scandic Hotels.
Diversification Opportunities for Royal Bank and Scandic Hotels
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Royal and Scandic is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group and Royal Bank 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 Royal Bank of are associated (or correlated) with Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Royal Bank i.e., Royal Bank and Scandic Hotels go up and down completely randomly.
Pair Corralation between Royal Bank and Scandic Hotels
Assuming the 90 days trading horizon Royal Bank of is expected to generate 0.61 times more return on investment than Scandic Hotels. However, Royal Bank of is 1.63 times less risky than Scandic Hotels. It trades about 0.07 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about -0.08 per unit of risk. If you would invest 12,346 in Royal Bank of on September 13, 2024 and sell it today you would earn a total of 175.00 from holding Royal Bank of or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Scandic Hotels Group
Performance |
| Timeline |
| Royal Bank |
| Scandic Hotels Group |
Royal Bank and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Scandic Hotels
The main advantage of trading using opposite Royal Bank and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| Royal Bank vs. Gaztransport et Technigaz | Royal Bank vs. CNH Industrial NV | Royal Bank vs. McEwen Mining | Royal Bank vs. GreenX Metals |
| Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Hyundai Motor | Scandic Hotels vs. Reliance Industries Ltd |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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