Correlation Between Holmen AB and Avanza Bank
Can any of the company-specific risk be diversified away by investing in both Holmen AB and Avanza Bank 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 Holmen AB and Avanza Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and Avanza Bank Holding, you can compare the effects of market volatilities on Holmen AB and Avanza Bank 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 Holmen AB with a short position of Avanza Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and Avanza Bank.
Diversification Opportunities for Holmen AB and Avanza Bank
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Holmen and Avanza is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB and Avanza Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanza Bank Holding and Holmen 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 Holmen AB are associated (or correlated) with Avanza Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanza Bank Holding has no effect on the direction of Holmen AB i.e., Holmen AB and Avanza Bank go up and down completely randomly.
Pair Corralation between Holmen AB and Avanza Bank
Assuming the 90 days trading horizon Holmen AB is expected to generate 2.67 times less return on investment than Avanza Bank. In addition to that, Holmen AB is 1.31 times more volatile than Avanza Bank Holding. It trades about 0.17 of its total potential returns per unit of risk. Avanza Bank Holding is currently generating about 0.59 per unit of volatility. If you would invest 26,740 in Avanza Bank Holding on October 22, 2024 and sell it today you would earn a total of 2,140 from holding Avanza Bank Holding or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
Holmen AB vs. Avanza Bank Holding
Performance |
| Timeline |
| Holmen AB |
| Avanza Bank Holding |
Holmen AB and Avanza Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and Avanza Bank
The main advantage of trading using opposite Holmen AB and Avanza Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB position performs unexpectedly, Avanza Bank 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 Avanza Bank will offset losses from the drop in Avanza Bank's long position.| Holmen AB vs. Svenska Cellulosa Aktiebolaget | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Boliden AB | Holmen AB vs. Husqvarna AB |
| Avanza Bank vs. Axfood AB | Avanza Bank vs. Samhllsbyggnadsbolaget i Norden | Avanza Bank vs. Castellum AB | Avanza Bank vs. Investor AB ser |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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