Correlation Between Autoliv and Sportsmans
Can any of the company-specific risk be diversified away by investing in both Autoliv and Sportsmans 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 Autoliv and Sportsmans into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autoliv and Sportsmans, you can compare the effects of market volatilities on Autoliv and Sportsmans 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 Autoliv with a short position of Sportsmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and Sportsmans.
Diversification Opportunities for Autoliv and Sportsmans
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Autoliv and Sportsmans is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Sportsmans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans and Autoliv 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 Autoliv are associated (or correlated) with Sportsmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans has no effect on the direction of Autoliv i.e., Autoliv and Sportsmans go up and down completely randomly.
Pair Corralation between Autoliv and Sportsmans
Considering the 90-day investment horizon Autoliv is expected to generate 0.4 times more return on investment than Sportsmans. However, Autoliv is 2.53 times less risky than Sportsmans. It trades about 0.1 of its potential returns per unit of risk. Sportsmans is currently generating about -0.17 per unit of risk. If you would invest 9,481 in Autoliv on August 31, 2024 and sell it today you would earn a total of 379.00 from holding Autoliv or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autoliv vs. Sportsmans
Performance |
| Timeline |
| Autoliv |
| Sportsmans |
Autoliv and Sportsmans Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and Sportsmans
The main advantage of trading using opposite Autoliv and Sportsmans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, Sportsmans 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 Sportsmans will offset losses from the drop in Sportsmans' long position.The idea behind Autoliv and Sportsmans 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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