Correlation Between Castellum and Avanza Bank
Can any of the company-specific risk be diversified away by investing in both Castellum and Avanza Bank 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 Castellum and Avanza Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Castellum AB and Avanza Bank Holding, you can compare the effects of market volatilities on Castellum and Avanza Bank 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 Castellum with a short position of Avanza Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castellum and Avanza Bank.
Diversification Opportunities for Castellum and Avanza Bank
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Castellum and Avanza is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Castellum AB and Avanza Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanza Bank Holding and Castellum 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 Castellum AB are associated (or correlated) with Avanza Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanza Bank Holding has no effect on the direction of Castellum i.e., Castellum and Avanza Bank go up and down completely randomly.
Pair Corralation between Castellum and Avanza Bank
Assuming the 90 days trading horizon Castellum AB is expected to under-perform the Avanza Bank. But the stock apears to be less risky and, when comparing its historical volatility, Castellum AB is 1.44 times less risky than Avanza Bank. The stock trades about -0.07 of its potential returns per unit of risk. The Avanza Bank Holding is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 22,400 in Avanza Bank Holding on November 2, 2024 and sell it today you would earn a total of 10,540 from holding Avanza Bank Holding or generate 47.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Castellum AB vs. Avanza Bank Holding
Performance |
| Timeline |
| Castellum AB |
| Avanza Bank Holding |
Castellum and Avanza Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Castellum and Avanza Bank
The main advantage of trading using opposite Castellum and Avanza Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castellum position performs unexpectedly, Avanza Bank 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 Avanza Bank will offset losses from the drop in Avanza Bank's long position.| Castellum vs. Fabege AB | Castellum vs. Samhllsbyggnadsbolaget i Norden | Castellum vs. Fastighets AB Balder | Castellum vs. Axfood AB |
| Avanza Bank vs. Axfood AB | Avanza Bank vs. Samhllsbyggnadsbolaget i Norden | Avanza Bank vs. Castellum AB | Avanza Bank 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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