Correlation Between Axfood AB and TEAM Plc
Can any of the company-specific risk be diversified away by investing in both Axfood AB and TEAM Plc 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 TEAM Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and TEAM plc, you can compare the effects of market volatilities on Axfood AB and TEAM Plc 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 TEAM Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and TEAM Plc.
Diversification Opportunities for Axfood AB and TEAM Plc
Very weak diversification
The 3 months correlation between Axfood and TEAM is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and TEAM plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEAM plc 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 TEAM Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEAM plc has no effect on the direction of Axfood AB i.e., Axfood AB and TEAM Plc go up and down completely randomly.
Pair Corralation between Axfood AB and TEAM Plc
Assuming the 90 days trading horizon Axfood AB is expected to generate 0.61 times more return on investment than TEAM Plc. However, Axfood AB is 1.64 times less risky than TEAM Plc. It trades about -0.01 of its potential returns per unit of risk. TEAM plc is currently generating about -0.12 per unit of risk. If you would invest 26,374 in Axfood AB on September 4, 2024 and sell it today you would lose (2,859) from holding Axfood AB or give up 10.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Axfood AB vs. TEAM plc
Performance |
| Timeline |
| Axfood AB |
| TEAM plc |
Axfood AB and TEAM Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and TEAM Plc
The main advantage of trading using opposite Axfood AB and TEAM Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, TEAM Plc 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 TEAM Plc will offset losses from the drop in TEAM Plc's long position.| Axfood AB vs. Samsung Electronics Co | Axfood AB vs. Samsung Electronics Co | Axfood AB vs. Hyundai Motor | Axfood AB vs. Toyota Motor Corp |
| TEAM Plc vs. Auto Trader Group | TEAM Plc vs. Ecclesiastical Insurance Office | TEAM Plc vs. Veolia Environnement VE | TEAM Plc vs. Ecofin Global Utilities |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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