Correlation Between Axfood AB and Pets At
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Pets At 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 Pets At into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Pets at Home, you can compare the effects of market volatilities on Axfood AB and Pets At 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 Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Pets At.
Diversification Opportunities for Axfood AB and Pets At
Poor diversification
The 3 months correlation between Axfood and Pets is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home 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 Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Axfood AB i.e., Axfood AB and Pets At go up and down completely randomly.
Pair Corralation between Axfood AB and Pets At
Assuming the 90 days trading horizon Axfood AB is expected to generate 0.57 times more return on investment than Pets At. However, Axfood AB is 1.75 times less risky than Pets At. It trades about -0.05 of its potential returns per unit of risk. Pets at Home is currently generating about -0.53 per unit of risk. If you would invest 23,470 in Axfood AB on October 11, 2024 and sell it today you would lose (210.00) from holding Axfood AB or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. Pets at Home
Performance |
| Timeline |
| Axfood AB |
| Pets at Home |
Axfood AB and Pets At Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Pets At
The main advantage of trading using opposite Axfood AB and Pets At positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Pets At 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 Pets At will offset losses from the drop in Pets At's long position.| Axfood AB vs. Sealed Air Corp | Axfood AB vs. Heavitree Brewery | Axfood AB vs. Mindflair Plc | Axfood AB vs. Pentair PLC |
| Pets At vs. Axfood AB | Pets At vs. Spirent Communications plc | Pets At vs. Edita Food Industries | Pets At vs. Leroy Seafood Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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