Correlation Between Investment and VNV Global
Can any of the company-specific risk be diversified away by investing in both Investment and VNV Global 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 VNV Global 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 VNV Global AB, you can compare the effects of market volatilities on Investment and VNV Global 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 VNV Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and VNV Global.
Diversification Opportunities for Investment and VNV Global
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investment and VNV is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Latour and VNV Global AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VNV Global 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 VNV Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VNV Global AB has no effect on the direction of Investment i.e., Investment and VNV Global go up and down completely randomly.
Pair Corralation between Investment and VNV Global
Assuming the 90 days trading horizon Investment AB Latour is expected to under-perform the VNV Global. But the stock apears to be less risky and, when comparing its historical volatility, Investment AB Latour is 1.39 times less risky than VNV Global. The stock trades about -0.18 of its potential returns per unit of risk. The VNV Global AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,902 in VNV Global AB on September 3, 2024 and sell it today you would lose (4.00) from holding VNV Global AB or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Latour vs. VNV Global AB
Performance |
| Timeline |
| Investment AB Latour |
| VNV Global AB |
Investment and VNV Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and VNV Global
The main advantage of trading using opposite Investment and VNV Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, VNV Global 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 VNV Global will offset losses from the drop in VNV Global's long position.| Investment vs. Kinnevik Investment AB | Investment vs. Investor AB ser | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser |
| VNV Global vs. Kinnevik Investment AB | VNV Global vs. Investor AB ser | VNV Global vs. Sinch AB | VNV Global vs. Vef 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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