Correlation Between H M and Swedbank
Can any of the company-specific risk be diversified away by investing in both H M and Swedbank 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 H M and Swedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H M Hennes and Swedbank AB, you can compare the effects of market volatilities on H M and Swedbank 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 H M with a short position of Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and Swedbank.
Diversification Opportunities for H M and Swedbank
Very good diversification
The 3 months correlation between HM-B and Swedbank is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB and H M 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 H M Hennes are associated (or correlated) with Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of H M i.e., H M and Swedbank go up and down completely randomly.
Pair Corralation between H M and Swedbank
Assuming the 90 days trading horizon H M Hennes is expected to under-perform the Swedbank. In addition to that, H M is 1.63 times more volatile than Swedbank AB. It trades about -0.13 of its total potential returns per unit of risk. Swedbank AB is currently generating about 0.22 per unit of volatility. If you would invest 24,420 in Swedbank AB on November 27, 2024 and sell it today you would earn a total of 1,110 from holding Swedbank AB or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
H M Hennes vs. Swedbank AB
Performance |
| Timeline |
| H M Hennes |
| Swedbank AB |
H M and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H M and Swedbank
The main advantage of trading using opposite H M and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H M position performs unexpectedly, Swedbank 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 Swedbank will offset losses from the drop in Swedbank's long position.| H M vs. Telefonaktiebolaget LM Ericsson | H M vs. Swedbank AB | H M vs. AB Electrolux | H M vs. Investor AB ser |
| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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