Correlation Between Skandinaviska Enskilda and NIBE Industrier
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and NIBE Industrier 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 NIBE Industrier 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 NIBE Industrier AB, you can compare the effects of market volatilities on Skandinaviska Enskilda and NIBE Industrier 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 NIBE Industrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and NIBE Industrier.
Diversification Opportunities for Skandinaviska Enskilda and NIBE Industrier
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Skandinaviska and NIBE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and NIBE Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIBE Industrier 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 NIBE Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIBE Industrier AB has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and NIBE Industrier go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and NIBE Industrier
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to generate 0.26 times more return on investment than NIBE Industrier. However, Skandinaviska Enskilda Banken is 3.79 times less risky than NIBE Industrier. It trades about 0.74 of its potential returns per unit of risk. NIBE Industrier AB is currently generating about 0.1 per unit of risk. If you would invest 15,125 in Skandinaviska Enskilda Banken on October 25, 2024 and sell it today you would earn a total of 1,480 from holding Skandinaviska Enskilda Banken or generate 9.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. NIBE Industrier AB
Performance |
| Timeline |
| Skandinaviska Enskilda |
| NIBE Industrier AB |
Skandinaviska Enskilda and NIBE Industrier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and NIBE Industrier
The main advantage of trading using opposite Skandinaviska Enskilda and NIBE Industrier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, NIBE Industrier 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 NIBE Industrier will offset losses from the drop in NIBE Industrier'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 |
| NIBE Industrier vs. Hexagon AB | NIBE Industrier vs. Investor AB ser | NIBE Industrier vs. Investment AB Latour | NIBE Industrier vs. ASSA ABLOY 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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