Correlation Between Sandvik AB and Husqvarna
Can any of the company-specific risk be diversified away by investing in both Sandvik AB and Husqvarna 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 Sandvik AB and Husqvarna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandvik AB and Husqvarna AB, you can compare the effects of market volatilities on Sandvik AB and Husqvarna 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 Sandvik AB with a short position of Husqvarna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandvik AB and Husqvarna.
Diversification Opportunities for Sandvik AB and Husqvarna
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sandvik and Husqvarna is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sandvik AB and Husqvarna AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husqvarna AB and Sandvik 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 Sandvik AB are associated (or correlated) with Husqvarna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husqvarna AB has no effect on the direction of Sandvik AB i.e., Sandvik AB and Husqvarna go up and down completely randomly.
Pair Corralation between Sandvik AB and Husqvarna
Assuming the 90 days trading horizon Sandvik AB is expected to generate 0.68 times more return on investment than Husqvarna. However, Sandvik AB is 1.48 times less risky than Husqvarna. It trades about 0.03 of its potential returns per unit of risk. Husqvarna AB is currently generating about 0.0 per unit of risk. If you would invest 17,847 in Sandvik AB on September 12, 2024 and sell it today you would earn a total of 3,483 from holding Sandvik AB or generate 19.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandvik AB vs. Husqvarna AB
Performance |
| Timeline |
| Sandvik AB |
| Husqvarna AB |
Sandvik AB and Husqvarna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandvik AB and Husqvarna
The main advantage of trading using opposite Sandvik AB and Husqvarna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandvik AB position performs unexpectedly, Husqvarna 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 Husqvarna will offset losses from the drop in Husqvarna's long position.| Sandvik AB vs. AB SKF | Sandvik AB vs. Alfa Laval AB | Sandvik AB vs. Atlas Copco AB | Sandvik AB vs. Boliden AB |
| Husqvarna vs. AB SKF | Husqvarna vs. Industrivarden AB ser | Husqvarna vs. Trelleborg AB | Husqvarna vs. Svenska Cellulosa Aktiebolaget |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |