Correlation Between Bank Central and Swedbank
Can any of the company-specific risk be diversified away by investing in both Bank Central 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 Bank Central and Swedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Swedbank AB, you can compare the effects of market volatilities on Bank Central 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 Bank Central with a short position of Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Swedbank.
Diversification Opportunities for Bank Central and Swedbank
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Swedbank is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB and Bank Central 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 Bank Central Asia 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 Bank Central i.e., Bank Central and Swedbank go up and down completely randomly.
Pair Corralation between Bank Central and Swedbank
Assuming the 90 days horizon Bank Central is expected to generate 4.45 times less return on investment than Swedbank. But when comparing it to its historical volatility, Bank Central Asia is 1.27 times less risky than Swedbank. It trades about 0.01 of its potential returns per unit of risk. Swedbank AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,744 in Swedbank AB on November 2, 2024 and sell it today you would earn a total of 427.00 from holding Swedbank AB or generate 24.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank Central Asia vs. Swedbank AB
Performance |
| Timeline |
| Bank Central Asia |
| Swedbank AB |
Bank Central and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Swedbank
The main advantage of trading using opposite Bank Central and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central 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.| Bank Central vs. Nedbank Group | Bank Central vs. Standard Bank Group | Bank Central vs. Kasikornbank Public Co | Bank Central vs. KBC Groep NV |
| Swedbank vs. United Overseas Bank | Swedbank vs. KBC Groep NV | Swedbank vs. Jyske Bank AS | Swedbank vs. Israel Discount Bank |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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