Correlation Between TF Bank and Svenska Handelsbanken
Can any of the company-specific risk be diversified away by investing in both TF Bank and Svenska Handelsbanken 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 Svenska Handelsbanken 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 Svenska Handelsbanken AB, you can compare the effects of market volatilities on TF Bank and Svenska Handelsbanken 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 Svenska Handelsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of TF Bank and Svenska Handelsbanken.
Diversification Opportunities for TF Bank and Svenska Handelsbanken
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TFBANK and Svenska is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding TF Bank AB and Svenska Handelsbanken AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken 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 Svenska Handelsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Handelsbanken has no effect on the direction of TF Bank i.e., TF Bank and Svenska Handelsbanken go up and down completely randomly.
Pair Corralation between TF Bank and Svenska Handelsbanken
Assuming the 90 days trading horizon TF Bank AB is expected to generate 2.12 times more return on investment than Svenska Handelsbanken. However, TF Bank is 2.12 times more volatile than Svenska Handelsbanken AB. It trades about 0.18 of its potential returns per unit of risk. Svenska Handelsbanken AB is currently generating about 0.06 per unit of risk. If you would invest 32,400 in TF Bank AB on September 12, 2024 and sell it today you would earn a total of 2,900 from holding TF Bank AB or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TF Bank AB vs. Svenska Handelsbanken AB
Performance |
| Timeline |
| TF Bank AB |
| Svenska Handelsbanken |
TF Bank and Svenska Handelsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TF Bank and Svenska Handelsbanken
The main advantage of trading using opposite TF Bank and Svenska Handelsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TF Bank position performs unexpectedly, Svenska Handelsbanken 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 Svenska Handelsbanken will offset losses from the drop in Svenska Handelsbanken's long position.| TF Bank vs. Koninklijke Heijmans NV | TF Bank vs. Trelleborg AB | TF Bank vs. Ferronordic AB | TF Bank vs. KABE Group AB |
| Svenska Handelsbanken vs. Svenska Handelsbanken AB | Svenska Handelsbanken vs. Nordea Bank Abp | Svenska Handelsbanken vs. Atlas Copco AB | Svenska Handelsbanken vs. Skandinaviska Enskilda Banken |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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