Correlation Between Investment and Industrivarden
Can any of the company-specific risk be diversified away by investing in both Investment and Industrivarden 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 Investment and Industrivarden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Investment and Industrivarden AB ser, you can compare the effects of market volatilities on Investment and Industrivarden 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 Investment with a short position of Industrivarden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Industrivarden.
Diversification Opportunities for Investment and Industrivarden
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Investment and Industrivarden is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding The Investment and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser and Investment 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 The Investment are associated (or correlated) with Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of Investment i.e., Investment and Industrivarden go up and down completely randomly.
Pair Corralation between Investment and Industrivarden
Assuming the 90 days trading horizon The Investment is expected to generate 0.56 times more return on investment than Industrivarden. However, The Investment is 1.77 times less risky than Industrivarden. It trades about 0.23 of its potential returns per unit of risk. Industrivarden AB ser is currently generating about 0.09 per unit of risk. If you would invest 37,500 in The Investment on September 13, 2024 and sell it today you would earn a total of 800.00 from holding The Investment or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Investment vs. Industrivarden AB ser
Performance |
| Timeline |
| Investment |
| Industrivarden AB ser |
Investment and Industrivarden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Industrivarden
The main advantage of trading using opposite Investment and Industrivarden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, Industrivarden 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 Industrivarden will offset losses from the drop in Industrivarden's long position.| Investment vs. Panther Metals PLC | Investment vs. Catena Media PLC | Investment vs. Zinc Media Group | Investment vs. McEwen Mining |
| Industrivarden vs. Hochschild Mining plc | Industrivarden vs. Polar Capital Technology | Industrivarden vs. Vitec Software Group | Industrivarden vs. Samsung Electronics Co |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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