Correlation Between Svenska Handelsbanken and Inwido AB
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Inwido AB 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 Svenska Handelsbanken and Inwido AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Svenska Handelsbanken AB and Inwido AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Inwido AB 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 Svenska Handelsbanken with a short position of Inwido AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Inwido AB.
Diversification Opportunities for Svenska Handelsbanken and Inwido AB
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Svenska and Inwido is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Inwido AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inwido AB and Svenska Handelsbanken 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 Svenska Handelsbanken AB are associated (or correlated) with Inwido AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inwido AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Inwido AB go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Inwido AB
Assuming the 90 days trading horizon Svenska Handelsbanken is expected to generate 2.49 times less return on investment than Inwido AB. But when comparing it to its historical volatility, Svenska Handelsbanken AB is 1.41 times less risky than Inwido AB. It trades about 0.04 of its potential returns per unit of risk. Inwido AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,841 in Inwido AB on September 13, 2024 and sell it today you would earn a total of 9,019 from holding Inwido AB or generate 91.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken AB vs. Inwido AB
Performance |
| Timeline |
| Svenska Handelsbanken |
| Inwido AB |
Svenska Handelsbanken and Inwido AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Inwido AB
The main advantage of trading using opposite Svenska Handelsbanken and Inwido AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Inwido AB 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 Inwido AB will offset losses from the drop in Inwido AB's long position.| Svenska Handelsbanken vs. Svenska Handelsbanken AB | Svenska Handelsbanken vs. Nordea Bank Abp | Svenska Handelsbanken vs. Atlas Copco AB | Svenska Handelsbanken vs. Skandinaviska Enskilda Banken |
| Inwido AB vs. Skandinaviska Enskilda Banken | Inwido AB vs. Skandinaviska Enskilda Banken | Inwido AB vs. Swedbank AB | Inwido AB vs. Svenska Handelsbanken 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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