Correlation Between Tatton Asset and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Tatton Asset and Axfood AB 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 Tatton Asset and Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tatton Asset Management and Axfood AB, you can compare the effects of market volatilities on Tatton Asset and Axfood AB 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 Tatton Asset with a short position of Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tatton Asset and Axfood AB.
Diversification Opportunities for Tatton Asset and Axfood AB
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tatton and Axfood is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tatton Asset Management and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and Tatton Asset 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 Tatton Asset Management are associated (or correlated) with Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Tatton Asset i.e., Tatton Asset and Axfood AB go up and down completely randomly.
Pair Corralation between Tatton Asset and Axfood AB
Assuming the 90 days trading horizon Tatton Asset Management is expected to generate 1.3 times more return on investment than Axfood AB. However, Tatton Asset is 1.3 times more volatile than Axfood AB. It trades about 0.06 of its potential returns per unit of risk. Axfood AB is currently generating about -0.01 per unit of risk. If you would invest 41,380 in Tatton Asset Management on October 11, 2024 and sell it today you would earn a total of 27,020 from holding Tatton Asset Management or generate 65.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Tatton Asset Management vs. Axfood AB
Performance |
| Timeline |
| Tatton Asset Management |
| Axfood AB |
Tatton Asset and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tatton Asset and Axfood AB
The main advantage of trading using opposite Tatton Asset and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tatton Asset position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Tatton Asset vs. Eco Animal Health | Tatton Asset vs. STMicroelectronics NV | Tatton Asset vs. Cardinal Health | Tatton Asset vs. Compal Electronics GDR |
| Axfood AB vs. Sealed Air Corp | Axfood AB vs. Heavitree Brewery | Axfood AB vs. Mindflair Plc | Axfood AB vs. Pentair PLC |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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