Correlation Between Swedbank and Invisio Communications
Can any of the company-specific risk be diversified away by investing in both Swedbank and Invisio Communications 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 Invisio Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and Invisio Communications AB, you can compare the effects of market volatilities on Swedbank and Invisio Communications 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 Invisio Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and Invisio Communications.
Diversification Opportunities for Swedbank and Invisio Communications
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Swedbank and Invisio is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Invisio Communications AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invisio Communications 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 Invisio Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invisio Communications has no effect on the direction of Swedbank i.e., Swedbank and Invisio Communications go up and down completely randomly.
Pair Corralation between Swedbank and Invisio Communications
Assuming the 90 days trading horizon Swedbank AB is expected to generate 0.55 times more return on investment than Invisio Communications. However, Swedbank AB is 1.81 times less risky than Invisio Communications. It trades about 0.11 of its potential returns per unit of risk. Invisio Communications AB is currently generating about -0.1 per unit of risk. If you would invest 21,460 in Swedbank AB on September 13, 2024 and sell it today you would earn a total of 480.00 from holding Swedbank AB or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swedbank AB vs. Invisio Communications AB
Performance |
| Timeline |
| Swedbank AB |
| Invisio Communications |
Swedbank and Invisio Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedbank and Invisio Communications
The main advantage of trading using opposite Swedbank and Invisio Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank position performs unexpectedly, Invisio Communications 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 Invisio Communications will offset losses from the drop in Invisio Communications' long position.| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 AB |
| Invisio Communications vs. Hexatronic Group AB | Invisio Communications vs. CellaVision AB | Invisio Communications vs. Xvivo Perfusion AB | Invisio Communications vs. Sectra 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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