Correlation Between AB Electrolux and AB SKF
Can any of the company-specific risk be diversified away by investing in both AB Electrolux and AB SKF 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 AB Electrolux and AB SKF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Electrolux and AB SKF, you can compare the effects of market volatilities on AB Electrolux and AB SKF 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 AB Electrolux with a short position of AB SKF. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Electrolux and AB SKF.
Diversification Opportunities for AB Electrolux and AB SKF
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELUX-A and SKF-B is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding AB Electrolux and AB SKF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB SKF and AB Electrolux 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 AB Electrolux are associated (or correlated) with AB SKF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB SKF has no effect on the direction of AB Electrolux i.e., AB Electrolux and AB SKF go up and down completely randomly.
Pair Corralation between AB Electrolux and AB SKF
Assuming the 90 days trading horizon AB Electrolux is expected to generate 1.72 times more return on investment than AB SKF. However, AB Electrolux is 1.72 times more volatile than AB SKF. It trades about -0.01 of its potential returns per unit of risk. AB SKF is currently generating about -0.02 per unit of risk. If you would invest 11,500 in AB Electrolux on September 2, 2024 and sell it today you would lose (1,000.00) from holding AB Electrolux or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Electrolux vs. AB SKF
Performance |
| Timeline |
| AB Electrolux |
| AB SKF |
AB Electrolux and AB SKF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Electrolux and AB SKF
The main advantage of trading using opposite AB Electrolux and AB SKF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Electrolux position performs unexpectedly, AB SKF 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 SKF will offset losses from the drop in AB SKF's long position.| AB Electrolux vs. AB SKF | AB Electrolux vs. Tele2 AB | AB Electrolux vs. Sandvik AB | AB Electrolux vs. Skanska 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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