Correlation Between Swedbank and FM Mattsson
Can any of the company-specific risk be diversified away by investing in both Swedbank and FM Mattsson 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 FM Mattsson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and FM Mattsson Mora, you can compare the effects of market volatilities on Swedbank and FM Mattsson 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 FM Mattsson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and FM Mattsson.
Diversification Opportunities for Swedbank and FM Mattsson
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swedbank and FMM-B is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and FM Mattsson Mora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FM Mattsson Mora 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 FM Mattsson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FM Mattsson Mora has no effect on the direction of Swedbank i.e., Swedbank and FM Mattsson go up and down completely randomly.
Pair Corralation between Swedbank and FM Mattsson
Assuming the 90 days trading horizon Swedbank AB is expected to under-perform the FM Mattsson. But the stock apears to be less risky and, when comparing its historical volatility, Swedbank AB is 2.19 times less risky than FM Mattsson. The stock trades about -0.03 of its potential returns per unit of risk. The FM Mattsson Mora is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,962 in FM Mattsson Mora on August 26, 2024 and sell it today you would earn a total of 178.00 from holding FM Mattsson Mora or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swedbank AB vs. FM Mattsson Mora
Performance |
| Timeline |
| Swedbank AB |
| FM Mattsson Mora |
Swedbank and FM Mattsson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedbank and FM Mattsson
The main advantage of trading using opposite Swedbank and FM Mattsson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank position performs unexpectedly, FM Mattsson 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 FM Mattsson will offset losses from the drop in FM Mattsson's long position.| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 AB |
| FM Mattsson vs. Nordic Waterproofing Holding | FM Mattsson vs. Bufab Holding AB | FM Mattsson vs. Garo AB | FM Mattsson vs. Inwido 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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