Correlation Between Vitec Software and Avanza Bank
Can any of the company-specific risk be diversified away by investing in both Vitec Software and Avanza Bank 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 Vitec Software and Avanza Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vitec Software Group and Avanza Bank Holding, you can compare the effects of market volatilities on Vitec Software and Avanza Bank 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 Vitec Software with a short position of Avanza Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and Avanza Bank.
Diversification Opportunities for Vitec Software and Avanza Bank
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vitec and Avanza is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Avanza Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanza Bank Holding and Vitec Software 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 Vitec Software Group are associated (or correlated) with Avanza Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanza Bank Holding has no effect on the direction of Vitec Software i.e., Vitec Software and Avanza Bank go up and down completely randomly.
Pair Corralation between Vitec Software and Avanza Bank
Assuming the 90 days trading horizon Vitec Software Group is expected to generate 1.77 times more return on investment than Avanza Bank. However, Vitec Software is 1.77 times more volatile than Avanza Bank Holding. It trades about -0.04 of its potential returns per unit of risk. Avanza Bank Holding is currently generating about -0.11 per unit of risk. If you would invest 48,720 in Vitec Software Group on August 29, 2024 and sell it today you would lose (1,140) from holding Vitec Software Group or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vitec Software Group vs. Avanza Bank Holding
Performance |
| Timeline |
| Vitec Software Group |
| Avanza Bank Holding |
Vitec Software and Avanza Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vitec Software and Avanza Bank
The main advantage of trading using opposite Vitec Software and Avanza Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitec Software position performs unexpectedly, Avanza Bank 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 Avanza Bank will offset losses from the drop in Avanza Bank's long position.| Vitec Software vs. Lifco AB | Vitec Software vs. Lagercrantz Group AB | Vitec Software vs. Addtech AB | Vitec Software vs. Instalco Intressenter AB |
| Avanza Bank vs. Axfood AB | Avanza Bank vs. Samhllsbyggnadsbolaget i Norden | Avanza Bank vs. Castellum AB | Avanza Bank vs. Investor AB ser |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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