Correlation Between Axfood AB and Guaranty Trust
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Guaranty Trust 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 Guaranty Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Guaranty Trust Holding, you can compare the effects of market volatilities on Axfood AB and Guaranty Trust 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 Guaranty Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Guaranty Trust.
Diversification Opportunities for Axfood AB and Guaranty Trust
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Axfood and Guaranty is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Guaranty Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guaranty Trust Holding 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 Guaranty Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guaranty Trust Holding has no effect on the direction of Axfood AB i.e., Axfood AB and Guaranty Trust go up and down completely randomly.
Pair Corralation between Axfood AB and Guaranty Trust
Assuming the 90 days trading horizon Axfood AB is expected to generate 0.24 times more return on investment than Guaranty Trust. However, Axfood AB is 4.14 times less risky than Guaranty Trust. It trades about 0.03 of its potential returns per unit of risk. Guaranty Trust Holding is currently generating about -0.04 per unit of risk. If you would invest 23,610 in Axfood AB on December 8, 2024 and sell it today you would earn a total of 195.00 from holding Axfood AB or generate 0.83% 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. Guaranty Trust Holding
Performance |
| Timeline |
| Axfood AB |
| Guaranty Trust Holding |
Axfood AB and Guaranty Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Guaranty Trust
The main advantage of trading using opposite Axfood AB and Guaranty Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Guaranty Trust 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 Guaranty Trust will offset losses from the drop in Guaranty Trust's long position.| Axfood AB vs. SBM Offshore NV | ||
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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