Correlation Between EQT AB and VNV Global
Can any of the company-specific risk be diversified away by investing in both EQT AB and VNV Global 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 VNV Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT AB and VNV Global AB, you can compare the effects of market volatilities on EQT AB and VNV Global 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 VNV Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT AB and VNV Global.
Diversification Opportunities for EQT AB and VNV Global
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EQT and VNV is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and VNV Global AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VNV Global 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 VNV Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VNV Global AB has no effect on the direction of EQT AB i.e., EQT AB and VNV Global go up and down completely randomly.
Pair Corralation between EQT AB and VNV Global
Assuming the 90 days trading horizon EQT AB is expected to generate 1.93 times less return on investment than VNV Global. But when comparing it to its historical volatility, EQT AB is 1.19 times less risky than VNV Global. It trades about 0.18 of its potential returns per unit of risk. VNV Global AB is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,893 in VNV Global AB on November 20, 2024 and sell it today you would earn a total of 355.00 from holding VNV Global AB or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
EQT AB vs. VNV Global AB
Performance |
| Timeline |
| EQT AB |
| VNV Global AB |
EQT AB and VNV Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT AB and VNV Global
The main advantage of trading using opposite EQT AB and VNV Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT AB position performs unexpectedly, VNV Global 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 VNV Global will offset losses from the drop in VNV Global's long position.| EQT AB vs. Investor AB ser | EQT AB vs. Kinnevik Investment AB | EQT AB vs. Samhllsbyggnadsbolaget i Norden | EQT AB vs. Investment AB Latour |
| VNV Global vs. Kinnevik Investment AB | VNV Global vs. Investor AB ser | VNV Global vs. Sinch AB | VNV Global vs. Vef 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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