Correlation Between Investor and Avanza Bank
Can any of the company-specific risk be diversified away by investing in both Investor and Avanza Bank 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 Investor and Avanza Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and Avanza Bank Holding, you can compare the effects of market volatilities on Investor and Avanza Bank 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 Investor with a short position of Avanza Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Avanza Bank.
Diversification Opportunities for Investor and Avanza Bank
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Investor and Avanza is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Avanza Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanza Bank Holding and Investor 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 Investor AB ser are associated (or correlated) with Avanza Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanza Bank Holding has no effect on the direction of Investor i.e., Investor and Avanza Bank go up and down completely randomly.
Pair Corralation between Investor and Avanza Bank
Assuming the 90 days trading horizon Investor is expected to generate 4.9 times less return on investment than Avanza Bank. But when comparing it to its historical volatility, Investor AB ser is 1.4 times less risky than Avanza Bank. It trades about 0.19 of its potential returns per unit of risk. Avanza Bank Holding is currently generating about 0.65 of returns per unit of risk over similar time horizon. If you would invest 21,590 in Avanza Bank Holding on October 21, 2024 and sell it today you would earn a total of 7,290 from holding Avanza Bank Holding or generate 33.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. Avanza Bank Holding
Performance |
| Timeline |
| Investor AB ser |
| Avanza Bank Holding |
Investor and Avanza Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and Avanza Bank
The main advantage of trading using opposite Investor and Avanza Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, Avanza Bank 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 Avanza Bank will offset losses from the drop in Avanza Bank's long position.| Investor vs. Kinnevik Investment AB | Investor vs. Investment AB Latour | Investor vs. Samhllsbyggnadsbolaget i Norden | Investor vs. Industrivarden AB ser |
| Avanza Bank vs. Axfood AB | Avanza Bank vs. Samhllsbyggnadsbolaget i Norden | Avanza Bank vs. Castellum AB | Avanza Bank vs. Investor AB ser |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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