Correlation Between Swedbank and 24SevenOffice Scandinavia
Can any of the company-specific risk be diversified away by investing in both Swedbank and 24SevenOffice Scandinavia 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 24SevenOffice Scandinavia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and 24SevenOffice Scandinavia AB, you can compare the effects of market volatilities on Swedbank and 24SevenOffice Scandinavia 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 24SevenOffice Scandinavia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and 24SevenOffice Scandinavia.
Diversification Opportunities for Swedbank and 24SevenOffice Scandinavia
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Swedbank and 24SevenOffice is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and 24SevenOffice Scandinavia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 24SevenOffice Scandinavia 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 24SevenOffice Scandinavia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 24SevenOffice Scandinavia has no effect on the direction of Swedbank i.e., Swedbank and 24SevenOffice Scandinavia go up and down completely randomly.
Pair Corralation between Swedbank and 24SevenOffice Scandinavia
Assuming the 90 days trading horizon Swedbank AB is expected to generate 0.79 times more return on investment than 24SevenOffice Scandinavia. However, Swedbank AB is 1.26 times less risky than 24SevenOffice Scandinavia. It trades about 0.43 of its potential returns per unit of risk. 24SevenOffice Scandinavia AB is currently generating about 0.28 per unit of risk. If you would invest 21,830 in Swedbank AB on October 30, 2024 and sell it today you would earn a total of 2,420 from holding Swedbank AB or generate 11.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swedbank AB vs. 24SevenOffice Scandinavia AB
Performance |
| Timeline |
| Swedbank AB |
| 24SevenOffice Scandinavia |
Swedbank and 24SevenOffice Scandinavia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedbank and 24SevenOffice Scandinavia
The main advantage of trading using opposite Swedbank and 24SevenOffice Scandinavia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank position performs unexpectedly, 24SevenOffice Scandinavia 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 24SevenOffice Scandinavia will offset losses from the drop in 24SevenOffice Scandinavia's long position.| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 AB |
| 24SevenOffice Scandinavia vs. Humble Group AB | 24SevenOffice Scandinavia vs. Enad Global 7 | 24SevenOffice Scandinavia vs. Goodbye Kansas Group | 24SevenOffice Scandinavia vs. KABE Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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