Correlation Between Scandic Hotels and Wolters Kluwer
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and Wolters Kluwer 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 Scandic Hotels and Wolters Kluwer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandic Hotels Group and Wolters Kluwer, you can compare the effects of market volatilities on Scandic Hotels and Wolters Kluwer 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 Scandic Hotels with a short position of Wolters Kluwer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and Wolters Kluwer.
Diversification Opportunities for Scandic Hotels and Wolters Kluwer
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Scandic and Wolters is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and Wolters Kluwer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwer and Scandic Hotels 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 Scandic Hotels Group are associated (or correlated) with Wolters Kluwer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwer has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and Wolters Kluwer go up and down completely randomly.
Pair Corralation between Scandic Hotels and Wolters Kluwer
Assuming the 90 days trading horizon Scandic Hotels is expected to generate 3.58 times less return on investment than Wolters Kluwer. In addition to that, Scandic Hotels is 2.42 times more volatile than Wolters Kluwer. It trades about 0.05 of its total potential returns per unit of risk. Wolters Kluwer is currently generating about 0.42 per unit of volatility. If you would invest 15,308 in Wolters Kluwer on September 18, 2024 and sell it today you would earn a total of 922.00 from holding Wolters Kluwer or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Scandic Hotels Group vs. Wolters Kluwer
Performance |
| Timeline |
| Scandic Hotels Group |
| Wolters Kluwer |
Scandic Hotels and Wolters Kluwer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandic Hotels and Wolters Kluwer
The main advantage of trading using opposite Scandic Hotels and Wolters Kluwer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels position performs unexpectedly, Wolters Kluwer 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 Wolters Kluwer will offset losses from the drop in Wolters Kluwer's long position.| Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Hyundai Motor | Scandic Hotels vs. Reliance Industries Ltd |
| Wolters Kluwer vs. Compal Electronics GDR | Wolters Kluwer vs. Synthomer plc | Wolters Kluwer vs. Scandic Hotels Group | Wolters Kluwer vs. JD Sports Fashion |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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