Correlation Between EQT AB and NIBE Industrier
Can any of the company-specific risk be diversified away by investing in both EQT AB and NIBE Industrier 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 EQT AB and NIBE Industrier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT AB and NIBE Industrier AB, you can compare the effects of market volatilities on EQT AB and NIBE Industrier 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 EQT AB with a short position of NIBE Industrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT AB and NIBE Industrier.
Diversification Opportunities for EQT AB and NIBE Industrier
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between EQT and NIBE is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and NIBE Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIBE Industrier AB and EQT AB 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 EQT AB are associated (or correlated) with NIBE Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIBE Industrier AB has no effect on the direction of EQT AB i.e., EQT AB and NIBE Industrier go up and down completely randomly.
Pair Corralation between EQT AB and NIBE Industrier
Assuming the 90 days trading horizon EQT AB is expected to generate 0.75 times more return on investment than NIBE Industrier. However, EQT AB is 1.33 times less risky than NIBE Industrier. It trades about 0.01 of its potential returns per unit of risk. NIBE Industrier AB is currently generating about -0.02 per unit of risk. If you would invest 32,070 in EQT AB on August 28, 2024 and sell it today you would lose (350.00) from holding EQT AB or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EQT AB vs. NIBE Industrier AB
Performance |
| Timeline |
| EQT AB |
| NIBE Industrier AB |
EQT AB and NIBE Industrier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT AB and NIBE Industrier
The main advantage of trading using opposite EQT AB and NIBE Industrier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT AB position performs unexpectedly, NIBE Industrier 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 NIBE Industrier will offset losses from the drop in NIBE Industrier's long position.| EQT AB vs. Norva24 Group AB | EQT AB vs. KABE Group AB | EQT AB vs. IAR Systems Group | EQT AB vs. Clinical Laserthermia Systems |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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