Correlation Between Evolution and NIBE Industrier
Can any of the company-specific risk be diversified away by investing in both Evolution 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 Evolution and NIBE Industrier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution AB and NIBE Industrier AB, you can compare the effects of market volatilities on Evolution 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 Evolution with a short position of NIBE Industrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution and NIBE Industrier.
Diversification Opportunities for Evolution and NIBE Industrier
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Evolution and NIBE is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Evolution 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 Evolution 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 Evolution 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 Evolution i.e., Evolution and NIBE Industrier go up and down completely randomly.
Pair Corralation between Evolution and NIBE Industrier
Assuming the 90 days trading horizon Evolution AB is expected to generate 0.75 times more return on investment than NIBE Industrier. However, Evolution AB is 1.33 times less risky than NIBE Industrier. It trades about -0.06 of its potential returns per unit of risk. NIBE Industrier AB is currently generating about -0.04 per unit of risk. If you would invest 113,000 in Evolution AB on September 1, 2024 and sell it today you would lose (17,800) from holding Evolution AB or give up 15.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Evolution AB vs. NIBE Industrier AB
Performance |
| Timeline |
| Evolution AB |
| NIBE Industrier AB |
Evolution and NIBE Industrier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution and NIBE Industrier
The main advantage of trading using opposite Evolution and NIBE Industrier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution 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.| Evolution vs. Embracer Group AB | Evolution vs. Sinch AB | Evolution vs. Kambi Group PLC | Evolution vs. Samhllsbyggnadsbolaget i Norden |
| NIBE Industrier vs. Hexagon AB | NIBE Industrier vs. Investor AB ser | NIBE Industrier vs. Investment AB Latour | NIBE Industrier vs. ASSA ABLOY 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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