Correlation Between IAR Systems and Momentum Group
Can any of the company-specific risk be diversified away by investing in both IAR Systems and Momentum Group 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 Momentum Group 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 Momentum Group AB, you can compare the effects of market volatilities on IAR Systems and Momentum Group 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 Momentum Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAR Systems and Momentum Group.
Diversification Opportunities for IAR Systems and Momentum Group
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IAR and Momentum is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding IAR Systems Group and Momentum Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Momentum Group AB 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 Momentum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Momentum Group AB has no effect on the direction of IAR Systems i.e., IAR Systems and Momentum Group go up and down completely randomly.
Pair Corralation between IAR Systems and Momentum Group
Assuming the 90 days trading horizon IAR Systems Group is expected to under-perform the Momentum Group. In addition to that, IAR Systems is 1.84 times more volatile than Momentum Group AB. It trades about -0.09 of its total potential returns per unit of risk. Momentum Group AB is currently generating about 0.02 per unit of volatility. If you would invest 17,000 in Momentum Group AB on August 24, 2024 and sell it today you would earn a total of 60.00 from holding Momentum Group AB or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAR Systems Group vs. Momentum Group AB
Performance |
| Timeline |
| IAR Systems Group |
| Momentum Group AB |
IAR Systems and Momentum Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAR Systems and Momentum Group
The main advantage of trading using opposite IAR Systems and Momentum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAR Systems position performs unexpectedly, Momentum Group 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 Momentum Group will offset losses from the drop in Momentum Group'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 |
| Momentum Group vs. Bergman Beving AB | Momentum Group vs. Lagercrantz Group AB | Momentum Group vs. AddLife AB | Momentum Group vs. Addtech 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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