Correlation Between Swedbank and Investment
Can any of the company-specific risk be diversified away by investing in both Swedbank and Investment 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 Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and Investment AB Latour, you can compare the effects of market volatilities on Swedbank and Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and Investment.
Diversification Opportunities for Swedbank and Investment
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Swedbank and Investment is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Investment AB Latour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment AB Latour 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment AB Latour has no effect on the direction of Swedbank i.e., Swedbank and Investment go up and down completely randomly.
Pair Corralation between Swedbank and Investment
Assuming the 90 days trading horizon Swedbank AB is expected to generate 1.17 times more return on investment than Investment. However, Swedbank is 1.17 times more volatile than Investment AB Latour. It trades about 0.42 of its potential returns per unit of risk. Investment AB Latour is currently generating about 0.18 per unit of risk. If you would invest 21,960 in Swedbank AB on November 2, 2024 and sell it today you would earn a total of 2,520 from holding Swedbank AB or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swedbank AB vs. Investment AB Latour
Performance |
| Timeline |
| Swedbank AB |
| Investment AB Latour |
Swedbank and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedbank and Investment
The main advantage of trading using opposite Swedbank and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 AB |
| Investment vs. Kinnevik Investment AB | Investment vs. Investor AB ser | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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