Correlation Between Husqvarna and NIBE Industrier
Can any of the company-specific risk be diversified away by investing in both Husqvarna and NIBE Industrier 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 Husqvarna and NIBE Industrier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husqvarna AB and NIBE Industrier AB, you can compare the effects of market volatilities on Husqvarna and NIBE Industrier 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 Husqvarna with a short position of NIBE Industrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husqvarna and NIBE Industrier.
Diversification Opportunities for Husqvarna and NIBE Industrier
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Husqvarna and NIBE is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and NIBE Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIBE Industrier AB and Husqvarna 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 Husqvarna AB are associated (or correlated) with NIBE Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIBE Industrier AB has no effect on the direction of Husqvarna i.e., Husqvarna and NIBE Industrier go up and down completely randomly.
Pair Corralation between Husqvarna and NIBE Industrier
Assuming the 90 days trading horizon Husqvarna AB is expected to generate 0.77 times more return on investment than NIBE Industrier. However, Husqvarna AB is 1.3 times less risky than NIBE Industrier. It trades about -0.13 of its potential returns per unit of risk. NIBE Industrier AB is currently generating about -0.16 per unit of risk. If you would invest 5,958 in Husqvarna AB on November 27, 2024 and sell it today you would lose (370.00) from holding Husqvarna AB or give up 6.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husqvarna AB vs. NIBE Industrier AB
Performance |
| Timeline |
| Husqvarna AB |
| NIBE Industrier AB |
Husqvarna and NIBE Industrier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husqvarna and NIBE Industrier
The main advantage of trading using opposite Husqvarna and NIBE Industrier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husqvarna position performs unexpectedly, NIBE Industrier 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 NIBE Industrier will offset losses from the drop in NIBE Industrier's long position.The idea behind Husqvarna AB and NIBE Industrier AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NIBE Industrier vs. Hexagon AB | NIBE Industrier vs. Investor AB ser | NIBE Industrier vs. Investment AB Latour | NIBE Industrier vs. ASSA ABLOY 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |