Correlation Between Investor and Industrivarden
Can any of the company-specific risk be diversified away by investing in both Investor and Industrivarden 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 Investor and Industrivarden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and Industrivarden AB ser, you can compare the effects of market volatilities on Investor and Industrivarden 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 Investor with a short position of Industrivarden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Industrivarden.
Diversification Opportunities for Investor and Industrivarden
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Investor and Industrivarden is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser and Investor 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 Investor AB ser are associated (or correlated) with Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of Investor i.e., Investor and Industrivarden go up and down completely randomly.
Pair Corralation between Investor and Industrivarden
Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.77 times more return on investment than Industrivarden. However, Investor AB ser is 1.29 times less risky than Industrivarden. It trades about 0.1 of its potential returns per unit of risk. Industrivarden AB ser is currently generating about -0.07 per unit of risk. If you would invest 26,815 in Investor AB ser on February 4, 2024 and sell it today you would earn a total of 530.00 from holding Investor AB ser or generate 1.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Investor AB ser vs. Industrivarden AB ser
Performance |
Timeline |
Investor AB ser |
Industrivarden AB ser |
Investor and Industrivarden Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Investor and Industrivarden
The main advantage of trading using opposite Investor and Industrivarden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, Industrivarden 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 Industrivarden will offset losses from the drop in Industrivarden's long position.The idea behind Investor AB ser and Industrivarden AB ser 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.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |