Correlation Between Eastern and Husqvarna
Can any of the company-specific risk be diversified away by investing in both Eastern and Husqvarna 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 Eastern and Husqvarna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Husqvarna AB, you can compare the effects of market volatilities on Eastern and Husqvarna 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 Eastern with a short position of Husqvarna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Husqvarna.
Diversification Opportunities for Eastern and Husqvarna
Poor diversification
The 3 months correlation between Eastern and Husqvarna is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Husqvarna AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husqvarna AB and Eastern 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 Eastern Co are associated (or correlated) with Husqvarna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husqvarna AB has no effect on the direction of Eastern i.e., Eastern and Husqvarna go up and down completely randomly.
Pair Corralation between Eastern and Husqvarna
Considering the 90-day investment horizon Eastern Co is expected to generate 1.31 times more return on investment than Husqvarna. However, Eastern is 1.31 times more volatile than Husqvarna AB. It trades about 0.04 of its potential returns per unit of risk. Husqvarna AB is currently generating about -0.06 per unit of risk. If you would invest 2,419 in Eastern Co on August 28, 2024 and sell it today you would earn a total of 393.00 from holding Eastern Co or generate 16.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Eastern Co vs. Husqvarna AB
Performance |
| Timeline |
| Eastern |
| Husqvarna AB |
Eastern and Husqvarna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Husqvarna
The main advantage of trading using opposite Eastern and Husqvarna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern position performs unexpectedly, Husqvarna 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 Husqvarna will offset losses from the drop in Husqvarna's long position.The idea behind Eastern Co and Husqvarna AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Husqvarna vs. SMC Corp Japan | Husqvarna vs. Hong Kong Exchange | Husqvarna vs. AIA Group Ltd | Husqvarna vs. Techtronic Industries |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |