Correlation Between AstraZeneca PLC and AB Volvo
Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC and AB Volvo 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 AstraZeneca PLC and AB Volvo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstraZeneca PLC and AB Volvo, you can compare the effects of market volatilities on AstraZeneca PLC and AB Volvo 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 AstraZeneca PLC with a short position of AB Volvo. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and AB Volvo.
Diversification Opportunities for AstraZeneca PLC and AB Volvo
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AstraZeneca and VOLV-B is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo and AstraZeneca PLC 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 AstraZeneca PLC are associated (or correlated) with AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and AB Volvo go up and down completely randomly.
Pair Corralation between AstraZeneca PLC and AB Volvo
Assuming the 90 days trading horizon AstraZeneca PLC is expected to under-perform the AB Volvo. But the stock apears to be less risky and, when comparing its historical volatility, AstraZeneca PLC is 1.11 times less risky than AB Volvo. The stock trades about -0.05 of its potential returns per unit of risk. The AB Volvo is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 28,360 in AB Volvo on August 28, 2024 and sell it today you would lose (1,600) from holding AB Volvo or give up 5.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AstraZeneca PLC vs. AB Volvo
Performance |
| Timeline |
| AstraZeneca PLC |
| AB Volvo |
AstraZeneca PLC and AB Volvo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AstraZeneca PLC and AB Volvo
The main advantage of trading using opposite AstraZeneca PLC and AB Volvo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstraZeneca PLC position performs unexpectedly, AB Volvo 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 AB Volvo will offset losses from the drop in AB Volvo's long position.| AstraZeneca PLC vs. AB Volvo | AstraZeneca PLC vs. Telefonaktiebolaget LM Ericsson | AstraZeneca PLC vs. H M Hennes | AstraZeneca PLC vs. Investor AB ser |
| AB Volvo vs. AstraZeneca PLC | AB Volvo vs. H M Hennes | AB Volvo vs. Telefonaktiebolaget LM Ericsson | AB Volvo vs. Investor AB ser |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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