Correlation Between Investment and NIBE Industrier
Can any of the company-specific risk be diversified away by investing in both Investment and NIBE Industrier 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 NIBE Industrier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment AB Latour and NIBE Industrier AB, you can compare the effects of market volatilities on Investment and NIBE Industrier 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 NIBE Industrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and NIBE Industrier.
Diversification Opportunities for Investment and NIBE Industrier
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Investment and NIBE is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Latour and NIBE Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIBE Industrier AB 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 Investment AB Latour are associated (or correlated) with NIBE Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIBE Industrier AB has no effect on the direction of Investment i.e., Investment and NIBE Industrier go up and down completely randomly.
Pair Corralation between Investment and NIBE Industrier
Assuming the 90 days trading horizon Investment AB Latour is expected to generate 0.5 times more return on investment than NIBE Industrier. However, Investment AB Latour is 1.99 times less risky than NIBE Industrier. It trades about -0.23 of its potential returns per unit of risk. NIBE Industrier AB is currently generating about -0.15 per unit of risk. If you would invest 30,170 in Investment AB Latour on August 29, 2024 and sell it today you would lose (2,810) from holding Investment AB Latour or give up 9.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Latour vs. NIBE Industrier AB
Performance |
| Timeline |
| Investment AB Latour |
| NIBE Industrier AB |
Investment and NIBE Industrier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and NIBE Industrier
The main advantage of trading using opposite Investment and NIBE Industrier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, NIBE Industrier 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 NIBE Industrier will offset losses from the drop in NIBE Industrier's long position.| Investment vs. Kinnevik Investment AB | Investment vs. Investor AB ser | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser |
| NIBE Industrier vs. Hexagon AB | NIBE Industrier vs. Investor AB ser | NIBE Industrier vs. Investment AB Latour | NIBE Industrier vs. ASSA ABLOY 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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