Correlation Between Investor and Wallenstam
Can any of the company-specific risk be diversified away by investing in both Investor and Wallenstam 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 Wallenstam 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 Wallenstam AB, you can compare the effects of market volatilities on Investor and Wallenstam 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 Wallenstam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Wallenstam.
Diversification Opportunities for Investor and Wallenstam
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investor and Wallenstam is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Wallenstam AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallenstam AB 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 Wallenstam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallenstam AB has no effect on the direction of Investor i.e., Investor and Wallenstam go up and down completely randomly.
Pair Corralation between Investor and Wallenstam
Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.47 times more return on investment than Wallenstam. However, Investor AB ser is 2.15 times less risky than Wallenstam. It trades about 0.1 of its potential returns per unit of risk. Wallenstam AB is currently generating about 0.02 per unit of risk. If you would invest 18,143 in Investor AB ser on September 12, 2024 and sell it today you would earn a total of 12,157 from holding Investor AB ser or generate 67.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. Wallenstam AB
Performance |
| Timeline |
| Investor AB ser |
| Wallenstam AB |
Investor and Wallenstam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and Wallenstam
The main advantage of trading using opposite Investor and Wallenstam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, Wallenstam 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 Wallenstam will offset losses from the drop in Wallenstam's long position.| Investor vs. Catella AB | Investor vs. Catella AB A | Investor vs. KABE Group AB | Investor vs. IAR Systems Group |
| Wallenstam vs. Sinch AB | Wallenstam vs. Embracer Group AB | Wallenstam vs. Investor AB ser | Wallenstam vs. Castellum 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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