Correlation Between Renaissance Europe and Swedbank Robur

Can any of the company-specific risk be diversified away by investing in both Renaissance Europe and Swedbank Robur 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 Renaissance Europe and Swedbank Robur into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Renaissance Europe C and Swedbank Robur Corporate, you can compare the effects of market volatilities on Renaissance Europe and Swedbank Robur 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 Renaissance Europe with a short position of Swedbank Robur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renaissance Europe and Swedbank Robur.

Diversification Opportunities for Renaissance Europe and Swedbank Robur

-0.33

Correlation Coefficient

Renaissance Europe  Swedbank Robur

Very good diversification

The 3 months correlation between Renaissance and Swedbank is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Renaissance Europe C and Swedbank Robur Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank Robur Corporate and Renaissance Europe 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 Renaissance Europe C are associated (or correlated) with Swedbank Robur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank Robur Corporate has no effect on the direction of Renaissance Europe i.e., Renaissance Europe and Swedbank Robur go up and down completely randomly.

Pair Corralation between Renaissance Europe and Swedbank Robur

Assuming the 90 days trading horizon Renaissance Europe C is expected to generate 4.76 times more return on investment than Swedbank Robur. However, Renaissance Europe is 4.76 times more volatile than Swedbank Robur Corporate. It trades about 0.22 of its potential returns per unit of risk. Swedbank Robur Corporate is currently generating about 0.21 per unit of risk. If you would invest  25,851  in Renaissance Europe C on September 22, 2024 and sell it today you would earn a total of  1,000.00  from holding Renaissance Europe C or generate 3.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Renaissance Europe C  vs.  Swedbank Robur Corporate

Renaissance Europe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renaissance Europe C has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Renaissance Europe is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Swedbank Robur Corporate

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank Robur Corporate are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Swedbank Robur is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Renaissance Europe and Swedbank Robur

The main advantage of trading using opposite Renaissance Europe and Swedbank Robur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renaissance Europe position performs unexpectedly, Swedbank Robur 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 Swedbank Robur will offset losses from the drop in Swedbank Robur's long position.

The idea behind Renaissance Europe C and Swedbank Robur Corporate 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.