Correlation Between AB Volvo and Volvo AB
Can any of the company-specific risk be diversified away by investing in both AB Volvo and Volvo AB 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 AB Volvo and Volvo AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Volvo AB ADR, you can compare the effects of market volatilities on AB Volvo and Volvo AB 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 AB Volvo with a short position of Volvo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Volvo AB.
Diversification Opportunities for AB Volvo and Volvo AB
Modest diversification
The 3 months correlation between VOLAF and Volvo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Volvo AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volvo AB ADR and AB Volvo 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 AB Volvo are associated (or correlated) with Volvo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volvo AB ADR has no effect on the direction of AB Volvo i.e., AB Volvo and Volvo AB go up and down completely randomly.
Pair Corralation between AB Volvo and Volvo AB
Assuming the 90 days horizon AB Volvo is expected to under-perform the Volvo AB. But the pink sheet apears to be less risky and, when comparing its historical volatility, AB Volvo is 3.27 times less risky than Volvo AB. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Volvo AB ADR is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,408 in Volvo AB ADR on October 23, 2024 and sell it today you would earn a total of 155.00 from holding Volvo AB ADR or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Volvo vs. Volvo AB ADR
Performance |
| Timeline |
| AB Volvo |
| Volvo AB ADR |
AB Volvo and Volvo AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Volvo AB
The main advantage of trading using opposite AB Volvo and Volvo AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, Volvo AB 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 Volvo AB will offset losses from the drop in Volvo AB's long position.| AB Volvo vs. Volvo AB ADR | AB Volvo vs. Deere Company | AB Volvo vs. Volvo AB ser | AB Volvo vs. Deutsche Post AG |
| Volvo AB vs. AB Volvo | Volvo AB vs. Deere Company | Volvo AB vs. Hino Motors Ltd | Volvo AB vs. Daimler Truck Holding |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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