Correlation Between Sprott Focus and Skanska AB

Can any of the company-specific risk be diversified away by investing in both Sprott Focus and Skanska 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 Sprott Focus and Skanska AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sprott Focus Trust and Skanska AB ser, you can compare the effects of market volatilities on Sprott Focus and Skanska 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 Sprott Focus with a short position of Skanska AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Focus and Skanska AB.

Diversification Opportunities for Sprott Focus and Skanska AB

-0.01

Correlation Coefficient

Sprott Focus  Skanska AB

Good diversification

The 3 months correlation between Sprott and Skanska is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and Skanska AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skanska AB ser and Sprott Focus 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 Sprott Focus Trust are associated (or correlated) with Skanska AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skanska AB ser has no effect on the direction of Sprott Focus i.e., Sprott Focus and Skanska AB go up and down completely randomly.

Pair Corralation between Sprott Focus and Skanska AB

Given the investment horizon of 90 days Sprott Focus is expected to generate 8.4 times less return on investment than Skanska AB. But when comparing it to its historical volatility, Sprott Focus Trust is 1.76 times less risky than Skanska AB. It trades about 0.02 of its potential returns per unit of risk. Skanska AB ser is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,847  in Skanska AB ser on December 4, 2024 and sell it today you would earn a total of  582.00  from holding Skanska AB ser or generate 31.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sprott Focus Trust  vs.  Skanska AB ser

Sprott Focus Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprott Focus Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Skanska AB ser

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Skanska AB ser are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Skanska AB showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Focus and Skanska AB

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

The idea behind Sprott Focus Trust and Skanska 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.