Correlation Between Swedbank and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Swedbank and Dow 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 Swedbank and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and Dow Jones Industrial, you can compare the effects of market volatilities on Swedbank and Dow 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 Swedbank with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and Dow Jones.
Diversification Opportunities for Swedbank and Dow Jones
Good diversification
The 3 months correlation between Swedbank and Dow is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Swedbank 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 Swedbank AB are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Swedbank i.e., Swedbank and Dow Jones go up and down completely randomly.
Pair Corralation between Swedbank and Dow Jones
Assuming the 90 days horizon Swedbank AB is expected to generate 2.2 times more return on investment than Dow Jones. However, Swedbank is 2.2 times more volatile than Dow Jones Industrial. It trades about 0.39 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.41 per unit of risk. If you would invest 1,971 in Swedbank AB on November 2, 2024 and sell it today you would earn a total of 250.00 from holding Swedbank AB or generate 12.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swedbank AB vs. Dow Jones Industrial
Performance |
| Timeline |
Swedbank and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Swedbank AB
Pair trading matchups for Swedbank
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Swedbank and Dow Jones
The main advantage of trading using opposite Swedbank and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank position performs unexpectedly, Dow 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Swedbank vs. United Overseas Bank | Swedbank vs. KBC Groep NV | Swedbank vs. Jyske Bank AS | Swedbank vs. Israel Discount Bank |
| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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