Correlation Between Skandinaviska Enskilda and MilDef Group
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and MilDef Group 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 Skandinaviska Enskilda and MilDef Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skandinaviska Enskilda Banken and MilDef Group AB, you can compare the effects of market volatilities on Skandinaviska Enskilda and MilDef Group 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 Skandinaviska Enskilda with a short position of MilDef Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and MilDef Group.
Diversification Opportunities for Skandinaviska Enskilda and MilDef Group
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Skandinaviska and MilDef is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and MilDef Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MilDef Group AB and Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken are associated (or correlated) with MilDef Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MilDef Group AB has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and MilDef Group go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and MilDef Group
Assuming the 90 days trading horizon Skandinaviska Enskilda is expected to generate 15.43 times less return on investment than MilDef Group. But when comparing it to its historical volatility, Skandinaviska Enskilda Banken is 2.16 times less risky than MilDef Group. It trades about 0.02 of its potential returns per unit of risk. MilDef Group AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,990 in MilDef Group AB on September 2, 2024 and sell it today you would earn a total of 4,810 from holding MilDef Group AB or generate 68.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. MilDef Group AB
Performance |
| Timeline |
| Skandinaviska Enskilda |
| MilDef Group AB |
Skandinaviska Enskilda and MilDef Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and MilDef Group
The main advantage of trading using opposite Skandinaviska Enskilda and MilDef Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, MilDef Group 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 MilDef Group will offset losses from the drop in MilDef Group's long position.| Skandinaviska Enskilda vs. Swedbank AB | Skandinaviska Enskilda vs. Svenska Handelsbanken AB | Skandinaviska Enskilda vs. H M Hennes | Skandinaviska Enskilda vs. Telefonaktiebolaget LM Ericsson |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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