Correlation Between TF Bank and Arcario AB
Can any of the company-specific risk be diversified away by investing in both TF Bank and Arcario 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 TF Bank and Arcario AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TF Bank AB and Arcario AB, you can compare the effects of market volatilities on TF Bank and Arcario 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 TF Bank with a short position of Arcario AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of TF Bank and Arcario AB.
Diversification Opportunities for TF Bank and Arcario AB
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TFBANK and Arcario is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding TF Bank AB and Arcario AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcario AB and TF Bank 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 TF Bank AB are associated (or correlated) with Arcario AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcario AB has no effect on the direction of TF Bank i.e., TF Bank and Arcario AB go up and down completely randomly.
Pair Corralation between TF Bank and Arcario AB
Assuming the 90 days trading horizon TF Bank AB is expected to generate 0.39 times more return on investment than Arcario AB. However, TF Bank AB is 2.53 times less risky than Arcario AB. It trades about 0.26 of its potential returns per unit of risk. Arcario AB is currently generating about -0.04 per unit of risk. If you would invest 31,200 in TF Bank AB on September 1, 2024 and sell it today you would earn a total of 3,500 from holding TF Bank AB or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
TF Bank AB vs. Arcario AB
Performance |
| Timeline |
| TF Bank AB |
| Arcario AB |
TF Bank and Arcario AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TF Bank and Arcario AB
The main advantage of trading using opposite TF Bank and Arcario AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TF Bank position performs unexpectedly, Arcario 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 Arcario AB will offset losses from the drop in Arcario AB's long position.| TF Bank vs. Bure Equity AB | TF Bank vs. Creades AB | TF Bank vs. L E Lundbergfretagen | TF Bank vs. Industrivarden AB ser |
| Arcario AB vs. SolTech Energy Sweden | Arcario AB vs. eEducation Albert AB | Arcario AB vs. Addtech AB | Arcario AB vs. Catena Media 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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