Correlation Between Investment and NAXS Nordic
Can any of the company-specific risk be diversified away by investing in both Investment and NAXS Nordic 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 Investment and NAXS Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment AB Latour and NAXS Nordic Access, you can compare the effects of market volatilities on Investment and NAXS Nordic 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 Investment with a short position of NAXS Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and NAXS Nordic.
Diversification Opportunities for Investment and NAXS Nordic
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Investment and NAXS is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Latour and NAXS Nordic Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAXS Nordic Access and Investment 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 Investment AB Latour are associated (or correlated) with NAXS Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAXS Nordic Access has no effect on the direction of Investment i.e., Investment and NAXS Nordic go up and down completely randomly.
Pair Corralation between Investment and NAXS Nordic
Assuming the 90 days trading horizon Investment AB Latour is expected to generate 1.52 times more return on investment than NAXS Nordic. However, Investment is 1.52 times more volatile than NAXS Nordic Access. It trades about 0.02 of its potential returns per unit of risk. NAXS Nordic Access is currently generating about -0.16 per unit of risk. If you would invest 26,867 in Investment AB Latour on September 24, 2024 and sell it today you would earn a total of 543.00 from holding Investment AB Latour or generate 2.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Investment AB Latour vs. NAXS Nordic Access
Performance |
Timeline |
Investment AB Latour |
NAXS Nordic Access |
Investment and NAXS Nordic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Investment and NAXS Nordic
The main advantage of trading using opposite Investment and NAXS Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, NAXS Nordic 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 NAXS Nordic will offset losses from the drop in NAXS Nordic's long position.Investment vs. Kinnevik Investment AB | Investment vs. Investor AB ser | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser |
NAXS Nordic vs. Bure Equity AB | NAXS Nordic vs. Creades AB | NAXS Nordic vs. L E Lundbergfretagen | NAXS Nordic vs. Investment AB Latour |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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