Correlation Between Investment and Swedbank
Can any of the company-specific risk be diversified away by investing in both Investment and Swedbank 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 Swedbank 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 Swedbank AB, you can compare the effects of market volatilities on Investment and Swedbank 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 Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Swedbank.
Diversification Opportunities for Investment and Swedbank
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Investment and Swedbank is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Latour and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank 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 Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of Investment i.e., Investment and Swedbank go up and down completely randomly.
Pair Corralation between Investment and Swedbank
Assuming the 90 days trading horizon Investment is expected to generate 1.04 times less return on investment than Swedbank. In addition to that, Investment is 1.12 times more volatile than Swedbank AB. It trades about 0.04 of its total potential returns per unit of risk. Swedbank AB is currently generating about 0.05 per unit of volatility. If you would invest 17,412 in Swedbank AB on October 21, 2024 and sell it today you would earn a total of 5,838 from holding Swedbank AB or generate 33.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Latour vs. Swedbank AB
Performance |
| Timeline |
| Investment AB Latour |
| Swedbank AB |
Investment and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Swedbank
The main advantage of trading using opposite Investment and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, Swedbank 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 Swedbank will offset losses from the drop in Swedbank's long position.| Investment vs. Kinnevik Investment AB | Investment vs. Investor AB ser | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser |
| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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