Correlation Between Swedbank and AQ Group
Can any of the company-specific risk be diversified away by investing in both Swedbank and AQ Group 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 AQ Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and AQ Group AB, you can compare the effects of market volatilities on Swedbank and AQ Group 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 AQ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and AQ Group.
Diversification Opportunities for Swedbank and AQ Group
Poor diversification
The 3 months correlation between Swedbank and AQ Group is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and AQ Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AQ Group AB 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 AQ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AQ Group AB has no effect on the direction of Swedbank i.e., Swedbank and AQ Group go up and down completely randomly.
Pair Corralation between Swedbank and AQ Group
Assuming the 90 days trading horizon Swedbank is expected to generate 1.52 times less return on investment than AQ Group. But when comparing it to its historical volatility, Swedbank AB is 2.11 times less risky than AQ Group. It trades about 0.21 of its potential returns per unit of risk. AQ Group AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 13,608 in AQ Group AB on October 25, 2024 and sell it today you would earn a total of 2,926 from holding AQ Group AB or generate 21.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.31% |
| Values | Daily Returns |
Swedbank AB vs. AQ Group AB
Performance |
| Timeline |
| Swedbank AB |
| AQ Group AB |
Swedbank and AQ Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedbank and AQ Group
The main advantage of trading using opposite Swedbank and AQ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank position performs unexpectedly, AQ Group 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 AQ Group will offset losses from the drop in AQ Group's long position.| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 AB |
| AQ Group vs. Inwido AB | AQ Group vs. Bufab Holding AB | AQ Group vs. Beijer Alma AB | AQ Group vs. Addtech 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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