Correlation Between Skandinaviska Enskilda and Swedbank
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda 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 Skandinaviska Enskilda and Swedbank 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 Swedbank AB, you can compare the effects of market volatilities on Skandinaviska Enskilda 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 Skandinaviska Enskilda with a short position of Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Swedbank.
Diversification Opportunities for Skandinaviska Enskilda and Swedbank
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Skandinaviska and Swedbank is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank 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 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 Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Swedbank go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Swedbank
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to under-perform the Swedbank. In addition to that, Skandinaviska Enskilda is 1.36 times more volatile than Swedbank AB. It trades about -0.11 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 21,800 in Swedbank AB on August 24, 2024 and sell it today you would lose (320.00) from holding Swedbank AB or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. Swedbank AB
Performance |
| Timeline |
| Skandinaviska Enskilda |
| Swedbank AB |
Skandinaviska Enskilda and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and Swedbank
The main advantage of trading using opposite Skandinaviska Enskilda and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda 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.| Skandinaviska Enskilda vs. Swedbank AB | Skandinaviska Enskilda vs. Svenska Handelsbanken AB | Skandinaviska Enskilda vs. H M Hennes | Skandinaviska Enskilda vs. Telefonaktiebolaget LM Ericsson |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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