Correlation Between Swedbank and Industrivarden
Can any of the company-specific risk be diversified away by investing in both Swedbank and Industrivarden 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 Industrivarden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and Industrivarden AB ser, you can compare the effects of market volatilities on Swedbank and Industrivarden 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 Industrivarden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and Industrivarden.
Diversification Opportunities for Swedbank and Industrivarden
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Swedbank and Industrivarden is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser 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 Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of Swedbank i.e., Swedbank and Industrivarden go up and down completely randomly.
Pair Corralation between Swedbank and Industrivarden
Assuming the 90 days trading horizon Swedbank is expected to generate 1.09 times less return on investment than Industrivarden. In addition to that, Swedbank is 1.37 times more volatile than Industrivarden AB ser. It trades about 0.05 of its total potential returns per unit of risk. Industrivarden AB ser is currently generating about 0.07 per unit of volatility. If you would invest 26,369 in Industrivarden AB ser on October 21, 2024 and sell it today you would earn a total of 10,821 from holding Industrivarden AB ser or generate 41.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swedbank AB vs. Industrivarden AB ser
Performance |
| Timeline |
| Swedbank AB |
| Industrivarden AB ser |
Swedbank and Industrivarden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedbank and Industrivarden
The main advantage of trading using opposite Swedbank and Industrivarden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank position performs unexpectedly, Industrivarden 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 Industrivarden will offset losses from the drop in Industrivarden's long position.| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 AB |
| Industrivarden vs. Byggmstare Anders J | Industrivarden vs. KABE Group AB | Industrivarden vs. Creades AB | Industrivarden vs. NAXS Nordic Access |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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