Correlation Between River and Industrivarden
Can any of the company-specific risk be diversified away by investing in both River and Industrivarden 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 River and Industrivarden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between River and Mercantile and Industrivarden AB ser, you can compare the effects of market volatilities on River and Industrivarden 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 River with a short position of Industrivarden. Check out your portfolio center. Please also check ongoing floating volatility patterns of River and Industrivarden.
Diversification Opportunities for River and Industrivarden
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between River and Industrivarden is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding River and Mercantile and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser and River 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 River and Mercantile are associated (or correlated) with Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of River i.e., River and Industrivarden go up and down completely randomly.
Pair Corralation between River and Industrivarden
Assuming the 90 days trading horizon River and Mercantile is expected to under-perform the Industrivarden. But the stock apears to be less risky and, when comparing its historical volatility, River and Mercantile is 2.27 times less risky than Industrivarden. The stock trades about -0.17 of its potential returns per unit of risk. The Industrivarden AB ser is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 36,640 in Industrivarden AB ser on December 11, 2024 and sell it today you would earn a total of 3,250 from holding Industrivarden AB ser or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
River and Mercantile vs. Industrivarden AB ser
Performance |
| Timeline |
| River and Mercantile |
| Industrivarden AB ser |
River and Industrivarden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with River and Industrivarden
The main advantage of trading using opposite River and Industrivarden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if River position performs unexpectedly, Industrivarden 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 Industrivarden will offset losses from the drop in Industrivarden's long position.| River vs. PureTech Health plc | River vs. Bellevue Healthcare Trust | River vs. Target Healthcare REIT | River vs. Monster Beverage Corp |
| Industrivarden vs. Smithson Investment Trust | Industrivarden vs. Compal Electronics GDR | Industrivarden vs. OneSavings Bank PLC | Industrivarden vs. Vietnam Enterprise Investments |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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