Correlation Between Thule Group and AB Volvo
Can any of the company-specific risk be diversified away by investing in both Thule Group and AB Volvo 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 Thule Group and AB Volvo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thule Group AB and AB Volvo, you can compare the effects of market volatilities on Thule Group and AB Volvo 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 Thule Group with a short position of AB Volvo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thule Group and AB Volvo.
Diversification Opportunities for Thule Group and AB Volvo
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thule and VOLV-A is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Thule Group AB and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo and Thule Group 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 Thule Group AB are associated (or correlated) with AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of Thule Group i.e., Thule Group and AB Volvo go up and down completely randomly.
Pair Corralation between Thule Group and AB Volvo
Assuming the 90 days trading horizon Thule Group AB is expected to under-perform the AB Volvo. In addition to that, Thule Group is 1.5 times more volatile than AB Volvo. It trades about -0.06 of its total potential returns per unit of risk. AB Volvo is currently generating about -0.05 per unit of volatility. If you would invest 27,900 in AB Volvo on September 1, 2024 and sell it today you would lose (600.00) from holding AB Volvo or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thule Group AB vs. AB Volvo
Performance |
| Timeline |
| Thule Group AB |
| AB Volvo |
Thule Group and AB Volvo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thule Group and AB Volvo
The main advantage of trading using opposite Thule Group and AB Volvo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thule Group position performs unexpectedly, AB Volvo 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 AB Volvo will offset losses from the drop in AB Volvo's long position.| Thule Group vs. MIPS AB | Thule Group vs. NIBE Industrier AB | Thule Group vs. Dometic Group AB | Thule Group vs. Husqvarna AB |
| AB Volvo vs. Investor AB ser | AB Volvo vs. Sandvik AB | AB Volvo vs. Svenska Handelsbanken AB | AB Volvo vs. Atlas Copco 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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