Correlation Between Ag Growth and Volvo AB

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Can any of the company-specific risk be diversified away by investing in both Ag Growth and Volvo AB 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 Ag Growth and Volvo AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ag Growth International and Volvo AB ser, you can compare the effects of market volatilities on Ag Growth and Volvo AB 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 Ag Growth with a short position of Volvo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ag Growth and Volvo AB.

Diversification Opportunities for Ag Growth and Volvo AB

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between AGGZF and Volvo is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ag Growth International and Volvo AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volvo AB ser and Ag Growth 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 Ag Growth International are associated (or correlated) with Volvo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volvo AB ser has no effect on the direction of Ag Growth i.e., Ag Growth and Volvo AB go up and down completely randomly.

Pair Corralation between Ag Growth and Volvo AB

Assuming the 90 days horizon Ag Growth International is expected to under-perform the Volvo AB. In addition to that, Ag Growth is 1.76 times more volatile than Volvo AB ser. It trades about -0.11 of its total potential returns per unit of risk. Volvo AB ser is currently generating about 0.05 per unit of volatility. If you would invest  2,738  in Volvo AB ser on November 28, 2024 and sell it today you would earn a total of  367.00  from holding Volvo AB ser or generate 13.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy47.83%
ValuesDaily Returns

Ag Growth International  vs.  Volvo AB ser

 Performance 
       Timeline  
Ag Growth International 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Ag Growth International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Volvo AB ser 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Volvo AB ser are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Volvo AB reported solid returns over the last few months and may actually be approaching a breakup point.

Ag Growth and Volvo AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ag Growth and Volvo AB

The main advantage of trading using opposite Ag Growth and Volvo AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ag Growth position performs unexpectedly, Volvo AB 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 Volvo AB will offset losses from the drop in Volvo AB's long position.
The idea behind Ag Growth International and Volvo AB ser pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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