Correlation Between Industrivarden and Swedbank
Can any of the company-specific risk be diversified away by investing in both Industrivarden and Swedbank 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 Swedbank 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 Swedbank AB, you can compare the effects of market volatilities on Industrivarden and Swedbank 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 Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrivarden and Swedbank.
Diversification Opportunities for Industrivarden and Swedbank
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Industrivarden and Swedbank is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB 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 Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of Industrivarden i.e., Industrivarden and Swedbank go up and down completely randomly.
Pair Corralation between Industrivarden and Swedbank
Assuming the 90 days trading horizon Industrivarden AB ser is expected to generate 0.72 times more return on investment than Swedbank. However, Industrivarden AB ser is 1.39 times less risky than Swedbank. It trades about 0.08 of its potential returns per unit of risk. Swedbank AB is currently generating about 0.05 per unit of risk. If you would invest 27,171 in Industrivarden AB ser on November 2, 2024 and sell it today you would earn a total of 12,229 from holding Industrivarden AB ser or generate 45.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrivarden AB ser vs. Swedbank AB
Performance |
| Timeline |
| Industrivarden AB ser |
| Swedbank AB |
Industrivarden and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrivarden and Swedbank
The main advantage of trading using opposite Industrivarden and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrivarden position performs unexpectedly, Swedbank 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 Swedbank will offset losses from the drop in Swedbank's long position.| Industrivarden vs. Investor AB ser | Industrivarden vs. L E Lundbergfretagen | Industrivarden vs. Kinnevik Investment AB | Industrivarden vs. Investment AB Latour |
| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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