Correlation Between Avanza Bank and Swedbank
Can any of the company-specific risk be diversified away by investing in both Avanza Bank and Swedbank 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 Avanza Bank and Swedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanza Bank Holding and Swedbank AB, you can compare the effects of market volatilities on Avanza Bank and Swedbank 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 Avanza Bank with a short position of Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanza Bank and Swedbank.
Diversification Opportunities for Avanza Bank and Swedbank
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Avanza and Swedbank is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Avanza Bank Holding and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB and Avanza Bank 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 Avanza Bank Holding are associated (or correlated) with Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of Avanza Bank i.e., Avanza Bank and Swedbank go up and down completely randomly.
Pair Corralation between Avanza Bank and Swedbank
Assuming the 90 days trading horizon Avanza Bank Holding is expected to generate 1.02 times more return on investment than Swedbank. However, Avanza Bank is 1.02 times more volatile than Swedbank AB. It trades about -0.11 of its potential returns per unit of risk. Swedbank AB is currently generating about -0.15 per unit of risk. If you would invest 22,610 in Avanza Bank Holding on August 28, 2024 and sell it today you would lose (610.00) from holding Avanza Bank Holding or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanza Bank Holding vs. Swedbank AB
Performance |
| Timeline |
| Avanza Bank Holding |
| Swedbank AB |
Avanza Bank and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanza Bank and Swedbank
The main advantage of trading using opposite Avanza Bank and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanza Bank position performs unexpectedly, Swedbank 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 Swedbank will offset losses from the drop in Swedbank's long position.| Avanza Bank vs. Axfood AB | Avanza Bank vs. Samhllsbyggnadsbolaget i Norden | Avanza Bank vs. Castellum AB | Avanza Bank vs. Investor AB ser |
| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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