Correlation Between Guaranty Trust and Skandinaviska Enskilda

Can any of the company-specific risk be diversified away by investing in both Guaranty Trust and Skandinaviska Enskilda 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 Guaranty Trust and Skandinaviska Enskilda into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guaranty Trust Holding and Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on Guaranty Trust and Skandinaviska Enskilda 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 Guaranty Trust with a short position of Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guaranty Trust and Skandinaviska Enskilda.

Diversification Opportunities for Guaranty Trust and Skandinaviska Enskilda

0.1

Correlation Coefficient

Guaranty Trust  Skandinaviska Enskilda

Average diversification

The 3 months correlation between Guaranty and Skandinaviska is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda and Guaranty Trust 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 Guaranty Trust Holding are associated (or correlated) with Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of Guaranty Trust i.e., Guaranty Trust and Skandinaviska Enskilda go up and down completely randomly.

Pair Corralation between Guaranty Trust and Skandinaviska Enskilda

Assuming the 90 days trading horizon Guaranty Trust Holding is expected to generate 1.58 times more return on investment than Skandinaviska Enskilda. However, Guaranty Trust is 1.58 times more volatile than Skandinaviska Enskilda Banken. It trades about 0.06 of its potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about -0.11 per unit of risk. If you would invest  182.00  in Guaranty Trust Holding on September 4, 2024 and sell it today you would earn a total of  3.00  from holding Guaranty Trust Holding or generate 1.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Guaranty Trust Holding  vs.  Skandinaviska Enskilda Banken

Guaranty Trust Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Guaranty Trust is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Skandinaviska Enskilda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skandinaviska Enskilda Banken has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Skandinaviska Enskilda is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Guaranty Trust and Skandinaviska Enskilda

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

The idea behind Guaranty Trust Holding and Skandinaviska Enskilda Banken 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.