Correlation Between Industrivarden and AB Traction
Can any of the company-specific risk be diversified away by investing in both Industrivarden and AB Traction 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 AB Traction 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 AB Traction, you can compare the effects of market volatilities on Industrivarden and AB Traction 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 AB Traction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrivarden and AB Traction.
Diversification Opportunities for Industrivarden and AB Traction
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Industrivarden and TRAC-B is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and AB Traction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Traction 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 AB Traction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Traction has no effect on the direction of Industrivarden i.e., Industrivarden and AB Traction go up and down completely randomly.
Pair Corralation between Industrivarden and AB Traction
Assuming the 90 days trading horizon Industrivarden AB ser is expected to generate 0.78 times more return on investment than AB Traction. However, Industrivarden AB ser is 1.27 times less risky than AB Traction. It trades about 0.14 of its potential returns per unit of risk. AB Traction is currently generating about 0.05 per unit of risk. If you would invest 39,400 in Industrivarden AB ser on December 1, 2024 and sell it today you would earn a total of 1,170 from holding Industrivarden AB ser or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrivarden AB ser vs. AB Traction
Performance |
| Timeline |
| Industrivarden AB ser |
| AB Traction |
Industrivarden and AB Traction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrivarden and AB Traction
The main advantage of trading using opposite Industrivarden and AB Traction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrivarden position performs unexpectedly, AB Traction 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 AB Traction will offset losses from the drop in AB Traction's long position.| Industrivarden vs. Investor AB ser | Industrivarden vs. L E Lundbergfretagen | Industrivarden vs. Kinnevik Investment AB | Industrivarden vs. Investment AB Latour |
| AB Traction vs. Svolder AB | AB Traction vs. Investment AB Oresund | AB Traction vs. L E Lundbergfretagen | AB Traction vs. Creades 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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