Correlation Between IAR Systems and Traton SE
Can any of the company-specific risk be diversified away by investing in both IAR Systems and Traton SE 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 IAR Systems and Traton SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAR Systems Group and Traton SE, you can compare the effects of market volatilities on IAR Systems and Traton SE 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 IAR Systems with a short position of Traton SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR Systems and Traton SE.
Diversification Opportunities for IAR Systems and Traton SE
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IAR and Traton is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Traton SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traton SE and IAR Systems 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 IAR Systems Group are associated (or correlated) with Traton SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traton SE has no effect on the direction of IAR Systems i.e., IAR Systems and Traton SE go up and down completely randomly.
Pair Corralation between IAR Systems and Traton SE
Assuming the 90 days trading horizon IAR Systems Group is expected to generate 1.01 times more return on investment than Traton SE. However, IAR Systems is 1.01 times more volatile than Traton SE. It trades about 0.08 of its potential returns per unit of risk. Traton SE is currently generating about -0.12 per unit of risk. If you would invest 12,600 in IAR Systems Group on August 28, 2024 and sell it today you would earn a total of 350.00 from holding IAR Systems Group or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAR Systems Group vs. Traton SE
Performance |
| Timeline |
| IAR Systems Group |
| Traton SE |
IAR Systems and Traton SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR Systems and Traton SE
The main advantage of trading using opposite IAR Systems and Traton SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR Systems position performs unexpectedly, Traton SE 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 Traton SE will offset losses from the drop in Traton SE's long position.| IAR Systems vs. Lifco AB | IAR Systems vs. Lagercrantz Group AB | IAR Systems vs. Addtech AB | IAR Systems vs. Instalco Intressenter AB |
| Traton SE vs. Volvo Car AB | Traton SE vs. KABE Group AB | Traton SE vs. IAR Systems Group | Traton SE vs. Norva24 Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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