Correlation Between HomeStreet and Swedbank
Can any of the company-specific risk be diversified away by investing in both HomeStreet 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 HomeStreet and Swedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeStreet and Swedbank AB, you can compare the effects of market volatilities on HomeStreet 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 HomeStreet with a short position of Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeStreet and Swedbank.
Diversification Opportunities for HomeStreet and Swedbank
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HomeStreet and Swedbank is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding HomeStreet and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB and HomeStreet 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 HomeStreet 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 HomeStreet i.e., HomeStreet and Swedbank go up and down completely randomly.
Pair Corralation between HomeStreet and Swedbank
Given the investment horizon of 90 days HomeStreet is expected to under-perform the Swedbank. In addition to that, HomeStreet is 2.8 times more volatile than Swedbank AB. It trades about -0.01 of its total potential returns per unit of risk. Swedbank AB is currently generating about 0.03 per unit of volatility. If you would invest 1,744 in Swedbank AB on November 2, 2024 and sell it today you would earn a total of 427.00 from holding Swedbank AB or generate 24.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
HomeStreet vs. Swedbank AB
Performance |
| Timeline |
| HomeStreet |
| Swedbank AB |
HomeStreet and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeStreet and Swedbank
The main advantage of trading using opposite HomeStreet and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeStreet 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.| HomeStreet vs. Heartland Financial USA | HomeStreet vs. Heritage Commerce Corp | HomeStreet vs. Business First Bancshares | HomeStreet vs. German American Bancorp |
| Swedbank vs. United Overseas Bank | Swedbank vs. KBC Groep NV | Swedbank vs. Jyske Bank AS | Swedbank vs. Israel Discount Bank |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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