Correlation Between Nolato AB and Munters Group
Can any of the company-specific risk be diversified away by investing in both Nolato AB and Munters Group 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 Nolato AB and Munters Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nolato AB and Munters Group AB, you can compare the effects of market volatilities on Nolato AB and Munters Group 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 Nolato AB with a short position of Munters Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nolato AB and Munters Group.
Diversification Opportunities for Nolato AB and Munters Group
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nolato and Munters is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nolato AB and Munters Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Munters Group AB and Nolato AB 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 Nolato AB are associated (or correlated) with Munters Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Munters Group AB has no effect on the direction of Nolato AB i.e., Nolato AB and Munters Group go up and down completely randomly.
Pair Corralation between Nolato AB and Munters Group
Assuming the 90 days trading horizon Nolato AB is expected to under-perform the Munters Group. But the stock apears to be less risky and, when comparing its historical volatility, Nolato AB is 1.95 times less risky than Munters Group. The stock trades about -0.09 of its potential returns per unit of risk. The Munters Group AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 17,210 in Munters Group AB on September 1, 2024 and sell it today you would earn a total of 130.00 from holding Munters Group AB or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nolato AB vs. Munters Group AB
Performance |
| Timeline |
| Nolato AB |
| Munters Group AB |
Nolato AB and Munters Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nolato AB and Munters Group
The main advantage of trading using opposite Nolato AB and Munters Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nolato AB position performs unexpectedly, Munters Group 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 Munters Group will offset losses from the drop in Munters Group's long position.| Nolato AB vs. HEXPOL AB | Nolato AB vs. Trelleborg AB | Nolato AB vs. Indutrade AB | Nolato AB vs. Vitrolife AB |
| Munters Group vs. Lindab International AB | Munters Group vs. Nolato AB | Munters Group vs. Trelleborg AB | Munters Group vs. BillerudKorsnas 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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