Correlation Between MARKET VECTR and Indutrade
Can any of the company-specific risk be diversified away by investing in both MARKET VECTR and Indutrade 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 MARKET VECTR and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MARKET VECTR RETAIL and Indutrade AB, you can compare the effects of market volatilities on MARKET VECTR and Indutrade 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 MARKET VECTR with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of MARKET VECTR and Indutrade.
Diversification Opportunities for MARKET VECTR and Indutrade
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MARKET and Indutrade is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MARKET VECTR RETAIL and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and MARKET VECTR 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 MARKET VECTR RETAIL are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of MARKET VECTR i.e., MARKET VECTR and Indutrade go up and down completely randomly.
Pair Corralation between MARKET VECTR and Indutrade
Assuming the 90 days trading horizon MARKET VECTR is expected to generate 1.47 times less return on investment than Indutrade. But when comparing it to its historical volatility, MARKET VECTR RETAIL is 2.69 times less risky than Indutrade. It trades about 0.44 of its potential returns per unit of risk. Indutrade AB is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,434 in Indutrade AB on November 9, 2024 and sell it today you would earn a total of 222.00 from holding Indutrade AB or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MARKET VECTR RETAIL vs. Indutrade AB
Performance |
| Timeline |
| MARKET VECTR RETAIL |
| Indutrade AB |
MARKET VECTR and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MARKET VECTR and Indutrade
The main advantage of trading using opposite MARKET VECTR and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MARKET VECTR position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| MARKET VECTR vs. MeVis Medical Solutions | MARKET VECTR vs. Haverty Furniture Companies | MARKET VECTR vs. Scandinavian Tobacco Group | MARKET VECTR vs. IMPERIAL TOBACCO |
| Indutrade vs. Rocket Internet SE | Indutrade vs. Perseus Mining Limited | Indutrade vs. INTERNET INJPADR 1 | Indutrade vs. Highlight Communications AG |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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