Correlation Between Universal and Schibsted ASA
Can any of the company-specific risk be diversified away by investing in both Universal and Schibsted ASA 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 Universal and Schibsted ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal and Schibsted ASA ADR, you can compare the effects of market volatilities on Universal and Schibsted ASA 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 Universal with a short position of Schibsted ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal and Schibsted ASA.
Diversification Opportunities for Universal and Schibsted ASA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Universal and Schibsted is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Universal and Schibsted ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA ADR and Universal 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 Universal are associated (or correlated) with Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA ADR has no effect on the direction of Universal i.e., Universal and Schibsted ASA go up and down completely randomly.
Pair Corralation between Universal and Schibsted ASA
Considering the 90-day investment horizon Universal is expected to generate 0.7 times more return on investment than Schibsted ASA. However, Universal is 1.42 times less risky than Schibsted ASA. It trades about -0.02 of its potential returns per unit of risk. Schibsted ASA ADR is currently generating about -0.08 per unit of risk. If you would invest 5,379 in Universal on November 4, 2024 and sell it today you would lose (67.00) from holding Universal or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal vs. Schibsted ASA ADR
Performance |
| Timeline |
| Universal |
| Schibsted ASA ADR |
Universal and Schibsted ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal and Schibsted ASA
The main advantage of trading using opposite Universal and Schibsted ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal position performs unexpectedly, Schibsted ASA 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 Schibsted ASA will offset losses from the drop in Schibsted ASA's long position.| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
| Schibsted ASA vs. Lincoln Educational Services | Schibsted ASA vs. Freedom Holding Corp | Schibsted ASA vs. AA Mission Acquisition | Schibsted ASA vs. WEBTOON Entertainment Common |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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