Correlation Between XXL ASA and Teco 2030
Can any of the company-specific risk be diversified away by investing in both XXL ASA and Teco 2030 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 XXL ASA and Teco 2030 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XXL ASA and Teco 2030 Asa, you can compare the effects of market volatilities on XXL ASA and Teco 2030 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 XXL ASA with a short position of Teco 2030. Check out your portfolio center. Please also check ongoing floating volatility patterns of XXL ASA and Teco 2030.
Diversification Opportunities for XXL ASA and Teco 2030
Very poor diversification
The 3 months correlation between XXL and Teco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding XXL ASA and Teco 2030 Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teco 2030 Asa and XXL ASA 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 XXL ASA are associated (or correlated) with Teco 2030. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teco 2030 Asa has no effect on the direction of XXL ASA i.e., XXL ASA and Teco 2030 go up and down completely randomly.
Pair Corralation between XXL ASA and Teco 2030
Assuming the 90 days trading horizon XXL ASA is expected to under-perform the Teco 2030. In addition to that, XXL ASA is 1.21 times more volatile than Teco 2030 Asa. It trades about -0.36 of its total potential returns per unit of risk. Teco 2030 Asa is currently generating about -0.22 per unit of volatility. If you would invest 52.00 in Teco 2030 Asa on September 1, 2024 and sell it today you would lose (31.00) from holding Teco 2030 Asa or give up 59.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
XXL ASA vs. Teco 2030 Asa
Performance |
| Timeline |
| XXL ASA |
| Teco 2030 Asa |
XXL ASA and Teco 2030 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XXL ASA and Teco 2030
The main advantage of trading using opposite XXL ASA and Teco 2030 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XXL ASA position performs unexpectedly, Teco 2030 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 Teco 2030 will offset losses from the drop in Teco 2030's long position.The idea behind XXL ASA and Teco 2030 Asa pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Teco 2030 vs. Aurskog Sparebank | Teco 2030 vs. SpareBank 1 stlandet | Teco 2030 vs. Instabank ASA | Teco 2030 vs. Nidaros Sparebank |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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