Correlation Between Telefonaktiebolaget and Sarepta Therapeutics
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget and Sarepta Therapeutics 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 Telefonaktiebolaget and Sarepta Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonaktiebolaget LM Ericsson and Sarepta Therapeutics, you can compare the effects of market volatilities on Telefonaktiebolaget and Sarepta Therapeutics 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 Telefonaktiebolaget with a short position of Sarepta Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Sarepta Therapeutics.
Diversification Opportunities for Telefonaktiebolaget and Sarepta Therapeutics
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Telefonaktiebolaget and Sarepta is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Sarepta Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarepta Therapeutics and Telefonaktiebolaget 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 Telefonaktiebolaget LM Ericsson are associated (or correlated) with Sarepta Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarepta Therapeutics has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Sarepta Therapeutics go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Sarepta Therapeutics
Assuming the 90 days trading horizon Telefonaktiebolaget LM Ericsson is expected to generate 0.65 times more return on investment than Sarepta Therapeutics. However, Telefonaktiebolaget LM Ericsson is 1.55 times less risky than Sarepta Therapeutics. It trades about 0.1 of its potential returns per unit of risk. Sarepta Therapeutics is currently generating about 0.03 per unit of risk. If you would invest 1,282 in Telefonaktiebolaget LM Ericsson on August 28, 2024 and sell it today you would earn a total of 1,034 from holding Telefonaktiebolaget LM Ericsson or generate 80.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.42% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Sarepta Therapeutics
Performance |
| Timeline |
| Telefonaktiebolaget |
| Sarepta Therapeutics |
Telefonaktiebolaget and Sarepta Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Sarepta Therapeutics
The main advantage of trading using opposite Telefonaktiebolaget and Sarepta Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget position performs unexpectedly, Sarepta Therapeutics 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 Sarepta Therapeutics will offset losses from the drop in Sarepta Therapeutics' long position.| Telefonaktiebolaget vs. Monster Beverage | Telefonaktiebolaget vs. Dell Technologies | Telefonaktiebolaget vs. Marfrig Global Foods | Telefonaktiebolaget vs. MAHLE Metal Leve |
| Sarepta Therapeutics vs. Tyson Foods | Sarepta Therapeutics vs. Charter Communications | Sarepta Therapeutics vs. UnitedHealth Group Incorporated | Sarepta Therapeutics vs. Planet Fitness |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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