Correlation Between Fabege AB and Catena AB
Can any of the company-specific risk be diversified away by investing in both Fabege AB and Catena AB 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 Fabege AB and Catena AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabege AB and Catena AB, you can compare the effects of market volatilities on Fabege AB and Catena AB 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 Fabege AB with a short position of Catena AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabege AB and Catena AB.
Diversification Opportunities for Fabege AB and Catena AB
Very poor diversification
The 3 months correlation between Fabege and Catena is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fabege AB and Catena AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catena AB and Fabege 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 Fabege AB are associated (or correlated) with Catena AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catena AB has no effect on the direction of Fabege AB i.e., Fabege AB and Catena AB go up and down completely randomly.
Pair Corralation between Fabege AB and Catena AB
Assuming the 90 days trading horizon Fabege AB is expected to generate 1.15 times more return on investment than Catena AB. However, Fabege AB is 1.15 times more volatile than Catena AB. It trades about -0.09 of its potential returns per unit of risk. Catena AB is currently generating about -0.16 per unit of risk. If you would invest 8,670 in Fabege AB on August 25, 2024 and sell it today you would lose (330.00) from holding Fabege AB or give up 3.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabege AB vs. Catena AB
Performance |
| Timeline |
| Fabege AB |
| Catena AB |
Fabege AB and Catena AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabege AB and Catena AB
The main advantage of trading using opposite Fabege AB and Catena AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabege AB position performs unexpectedly, Catena AB 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 Catena AB will offset losses from the drop in Catena AB's long position.| Fabege AB vs. Castellum AB | Fabege AB vs. Fastighets AB Balder | Fabege AB vs. Wihlborgs Fastigheter AB | Fabege AB vs. Hufvudstaden AB |
| Catena AB vs. Fastighets AB Balder | Catena AB vs. Fabege AB | Catena AB vs. Wihlborgs Fastigheter AB | Catena AB vs. AB Sagax |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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