Correlation Between SBB-B and Swedbank
Can any of the company-specific risk be diversified away by investing in both SBB-B 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 SBB-B and Swedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samhllsbyggnadsbolaget i Norden and Swedbank AB, you can compare the effects of market volatilities on SBB-B 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 SBB-B with a short position of Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBB-B and Swedbank.
Diversification Opportunities for SBB-B and Swedbank
Very weak diversification
The 3 months correlation between SBB-B and Swedbank is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Samhllsbyggnadsbolaget i Norde and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB and SBB-B 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 Samhllsbyggnadsbolaget i Norden 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 SBB-B i.e., SBB-B and Swedbank go up and down completely randomly.
Pair Corralation between SBB-B and Swedbank
Assuming the 90 days trading horizon Samhllsbyggnadsbolaget i Norden is expected to under-perform the Swedbank. In addition to that, SBB-B is 4.22 times more volatile than Swedbank AB. It trades about 0.0 of its total potential returns per unit of risk. Swedbank AB is currently generating about 0.05 per unit of volatility. If you would invest 18,172 in Swedbank AB on November 2, 2024 and sell it today you would earn a total of 6,308 from holding Swedbank AB or generate 34.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samhllsbyggnadsbolaget i Norde vs. Swedbank AB
Performance |
| Timeline |
| Samhllsbyggnadsbolaget |
| Swedbank AB |
SBB-B and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBB-B and Swedbank
The main advantage of trading using opposite SBB-B and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBB-B 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.The idea behind Samhllsbyggnadsbolaget i Norden and Swedbank AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |