Correlation Between Svenska Cellulosa and Stella Jones
Can any of the company-specific risk be diversified away by investing in both Svenska Cellulosa and Stella Jones 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 Cellulosa and Stella Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Svenska Cellulosa Aktiebolaget and Stella Jones, you can compare the effects of market volatilities on Svenska Cellulosa and Stella Jones 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 Cellulosa with a short position of Stella Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Cellulosa and Stella Jones.
Diversification Opportunities for Svenska Cellulosa and Stella Jones
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Svenska and Stella is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Cellulosa Aktiebolaget and Stella Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stella Jones and Svenska Cellulosa 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 Cellulosa Aktiebolaget are associated (or correlated) with Stella Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stella Jones has no effect on the direction of Svenska Cellulosa i.e., Svenska Cellulosa and Stella Jones go up and down completely randomly.
Pair Corralation between Svenska Cellulosa and Stella Jones
Assuming the 90 days horizon Svenska Cellulosa is expected to generate 29.13 times less return on investment than Stella Jones. But when comparing it to its historical volatility, Svenska Cellulosa Aktiebolaget is 1.18 times less risky than Stella Jones. It trades about 0.0 of its potential returns per unit of risk. Stella Jones is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,553 in Stella Jones on August 28, 2024 and sell it today you would earn a total of 1,567 from holding Stella Jones or generate 44.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.62% |
| Values | Daily Returns |
Svenska Cellulosa Aktiebolaget vs. Stella Jones
Performance |
| Timeline |
| Svenska Cellulosa |
| Stella Jones |
Svenska Cellulosa and Stella Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Cellulosa and Stella Jones
The main advantage of trading using opposite Svenska Cellulosa and Stella Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Cellulosa position performs unexpectedly, Stella Jones 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 Stella Jones will offset losses from the drop in Stella Jones' long position.| Svenska Cellulosa vs. Interfor | Svenska Cellulosa vs. Western Forest Products | Svenska Cellulosa vs. Stella Jones | Svenska Cellulosa vs. Simpson Manufacturing |
| Stella Jones vs. Canfor | Stella Jones vs. West Fraser Timber | Stella Jones vs. Interfor | Stella Jones vs. Svenska Cellulosa Aktiebolaget |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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