Correlation Between River and SEB SA
Can any of the company-specific risk be diversified away by investing in both River and SEB SA 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 SEB SA 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 SEB SA, you can compare the effects of market volatilities on River and SEB SA 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 SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of River and SEB SA.
Diversification Opportunities for River and SEB SA
Excellent diversification
The 3 months correlation between River and SEB is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding River and Mercantile and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of River i.e., River and SEB SA go up and down completely randomly.
Pair Corralation between River and SEB SA
Assuming the 90 days trading horizon River is expected to generate 1.4 times less return on investment than SEB SA. But when comparing it to its historical volatility, River and Mercantile is 1.61 times less risky than SEB SA. It trades about 0.03 of its potential returns per unit of risk. SEB SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,576 in SEB SA on August 30, 2024 and sell it today you would earn a total of 1,454 from holding SEB SA or generate 19.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
River and Mercantile vs. SEB SA
Performance |
| Timeline |
| River and Mercantile |
| SEB SA |
River and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with River and SEB SA
The main advantage of trading using opposite River and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if River position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.| River vs. Bankers Investment Trust | River vs. Ecofin Global Utilities | River vs. Herald Investment Trust | River vs. Cairo Communication SpA |
| SEB SA vs. Waste Management | SEB SA vs. Tatton Asset Management | SEB SA vs. Jupiter Fund Management | SEB SA vs. Endeavour Mining Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |