Correlation Between IAR Systems and EEducation Albert
Can any of the company-specific risk be diversified away by investing in both IAR Systems and EEducation Albert 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 EEducation Albert 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 eEducation Albert AB, you can compare the effects of market volatilities on IAR Systems and EEducation Albert 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 EEducation Albert. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR Systems and EEducation Albert.
Diversification Opportunities for IAR Systems and EEducation Albert
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IAR and EEducation is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and eEducation Albert AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eEducation Albert 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 EEducation Albert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eEducation Albert has no effect on the direction of IAR Systems i.e., IAR Systems and EEducation Albert go up and down completely randomly.
Pair Corralation between IAR Systems and EEducation Albert
Assuming the 90 days trading horizon IAR Systems Group is expected to under-perform the EEducation Albert. In addition to that, IAR Systems is 1.74 times more volatile than eEducation Albert AB. It trades about -0.09 of its total potential returns per unit of risk. eEducation Albert AB is currently generating about -0.01 per unit of volatility. If you would invest 372.00 in eEducation Albert AB on August 24, 2024 and sell it today you would lose (2.00) from holding eEducation Albert AB or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAR Systems Group vs. eEducation Albert AB
Performance |
| Timeline |
| IAR Systems Group |
| eEducation Albert |
IAR Systems and EEducation Albert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR Systems and EEducation Albert
The main advantage of trading using opposite IAR Systems and EEducation Albert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR Systems position performs unexpectedly, EEducation Albert 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 EEducation Albert will offset losses from the drop in EEducation Albert'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 |
| EEducation Albert vs. Greater Than AB | EEducation Albert vs. Cint Group AB | EEducation Albert vs. Acconeer AB | EEducation Albert vs. IAR Systems Group |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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