Correlation Between Axfood AB and Sparebank
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Sparebank 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 Axfood AB and Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Sparebank 1 SR, you can compare the effects of market volatilities on Axfood AB and Sparebank 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 Axfood AB with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Sparebank.
Diversification Opportunities for Axfood AB and Sparebank
Good diversification
The 3 months correlation between Axfood and Sparebank is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR and Axfood AB 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 Axfood AB are associated (or correlated) with Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Axfood AB i.e., Axfood AB and Sparebank go up and down completely randomly.
Pair Corralation between Axfood AB and Sparebank
Assuming the 90 days trading horizon Axfood AB is expected to generate 6.45 times less return on investment than Sparebank. In addition to that, Axfood AB is 1.23 times more volatile than Sparebank 1 SR. It trades about 0.06 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.47 per unit of volatility. If you would invest 14,500 in Sparebank 1 SR on October 26, 2024 and sell it today you would earn a total of 1,150 from holding Sparebank 1 SR or generate 7.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. Sparebank 1 SR
Performance |
| Timeline |
| Axfood AB |
| Sparebank 1 SR |
Axfood AB and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Sparebank
The main advantage of trading using opposite Axfood AB and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.| Axfood AB vs. Fevertree Drinks Plc | Axfood AB vs. Odfjell Drilling | Axfood AB vs. Monster Beverage Corp | Axfood AB vs. Bloomsbury Publishing Plc |
| Sparebank vs. International Consolidated Airlines | Sparebank vs. Veolia Environnement VE | Sparebank vs. CVS Health Corp | Sparebank vs. Target Healthcare REIT |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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