Correlation Between Industrivarden and L E
Can any of the company-specific risk be diversified away by investing in both Industrivarden and L E 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 Industrivarden and L E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrivarden AB ser and L E Lundbergfretagen, you can compare the effects of market volatilities on Industrivarden and L E 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 Industrivarden with a short position of L E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrivarden and L E.
Diversification Opportunities for Industrivarden and L E
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Industrivarden and LUND-B is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and L E Lundbergfretagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L E Lundbergfretagen and Industrivarden 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 Industrivarden AB ser are associated (or correlated) with L E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L E Lundbergfretagen has no effect on the direction of Industrivarden i.e., Industrivarden and L E go up and down completely randomly.
Pair Corralation between Industrivarden and L E
Assuming the 90 days trading horizon Industrivarden AB ser is expected to under-perform the L E. But the stock apears to be less risky and, when comparing its historical volatility, Industrivarden AB ser is 1.0 times less risky than L E. The stock trades about -0.02 of its potential returns per unit of risk. The L E Lundbergfretagen is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 53,350 in L E Lundbergfretagen on September 1, 2024 and sell it today you would lose (450.00) from holding L E Lundbergfretagen or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrivarden AB ser vs. L E Lundbergfretagen
Performance |
| Timeline |
| Industrivarden AB ser |
| L E Lundbergfretagen |
Industrivarden and L E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrivarden and L E
The main advantage of trading using opposite Industrivarden and L E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrivarden position performs unexpectedly, L E 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 L E will offset losses from the drop in L E's long position.| Industrivarden vs. L E Lundbergfretagen | Industrivarden vs. Industrivarden AB ser | Industrivarden vs. Svenska Handelsbanken AB | Industrivarden vs. Investment AB Latour |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |