Correlation Between American Premium and Volvo AB
Can any of the company-specific risk be diversified away by investing in both American Premium and Volvo 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 American Premium and Volvo AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Premium Water and Volvo AB ser, you can compare the effects of market volatilities on American Premium and Volvo 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 American Premium with a short position of Volvo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Premium and Volvo AB.
Diversification Opportunities for American Premium and Volvo AB
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Volvo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Premium Water and Volvo AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volvo AB ser and American Premium 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 American Premium Water are associated (or correlated) with Volvo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volvo AB ser has no effect on the direction of American Premium i.e., American Premium and Volvo AB go up and down completely randomly.
Pair Corralation between American Premium and Volvo AB
Given the investment horizon of 90 days American Premium Water is expected to generate 95.87 times more return on investment than Volvo AB. However, American Premium is 95.87 times more volatile than Volvo AB ser. It trades about 0.2 of its potential returns per unit of risk. Volvo AB ser is currently generating about 0.05 per unit of risk. If you would invest 0.05 in American Premium Water on November 28, 2024 and sell it today you would lose (0.05) from holding American Premium Water or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.79% |
| Values | Daily Returns |
American Premium Water vs. Volvo AB ser
Performance |
| Timeline |
| American Premium Water |
| Volvo AB ser |
American Premium and Volvo AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Premium and Volvo AB
The main advantage of trading using opposite American Premium and Volvo AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Premium position performs unexpectedly, Volvo 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 Volvo AB will offset losses from the drop in Volvo AB's long position.| American Premium vs. First Tractor | American Premium vs. Ag Growth International | American Premium vs. AmeraMex International | American Premium vs. Arts Way Manufacturing Co |
| Volvo AB vs. Daimler Truck Holding | Volvo AB vs. Oshkosh | Volvo AB vs. Hydrofarm Holdings Group | Volvo AB vs. Hino Motors Ltd |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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