Correlation Between SEB SA and Mohawk Industries
Can any of the company-specific risk be diversified away by investing in both SEB SA and Mohawk Industries 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 SEB SA and Mohawk Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEB SA and Mohawk Industries, you can compare the effects of market volatilities on SEB SA and Mohawk Industries 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 SEB SA with a short position of Mohawk Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEB SA and Mohawk Industries.
Diversification Opportunities for SEB SA and Mohawk Industries
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SEB and Mohawk is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding SEB SA and Mohawk Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohawk Industries and SEB SA 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 SEB SA are associated (or correlated) with Mohawk Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohawk Industries has no effect on the direction of SEB SA i.e., SEB SA and Mohawk Industries go up and down completely randomly.
Pair Corralation between SEB SA and Mohawk Industries
Assuming the 90 days horizon SEB SA is expected to generate 5.83 times less return on investment than Mohawk Industries. But when comparing it to its historical volatility, SEB SA is 1.39 times less risky than Mohawk Industries. It trades about 0.01 of its potential returns per unit of risk. Mohawk Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,850 in Mohawk Industries on September 12, 2024 and sell it today you would earn a total of 2,450 from holding Mohawk Industries or generate 24.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
SEB SA vs. Mohawk Industries
Performance |
| Timeline |
| SEB SA |
| Mohawk Industries |
SEB SA and Mohawk Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEB SA and Mohawk Industries
The main advantage of trading using opposite SEB SA and Mohawk Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEB SA position performs unexpectedly, Mohawk Industries 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 Mohawk Industries will offset losses from the drop in Mohawk Industries' long position.| SEB SA vs. Suntory Beverage Food | SEB SA vs. ScanSource | SEB SA vs. YOOMA WELLNESS INC | SEB SA vs. Natural Health Trends |
| Mohawk Industries vs. Qingdao Haier Co | Mohawk Industries vs. Qingdao Haier Co | Mohawk Industries vs. SEB SA | Mohawk Industries vs. Derwent London PLC |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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