Correlation Between Swedbank and Partners Bank

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

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

Diversification Opportunities for Swedbank and Partners Bank

-0.18

Correlation Coefficient

Swedbank  Partners Bank

Good diversification

The 3 months correlation between Swedbank and Partners is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Partners Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partners Bank and Swedbank 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 Swedbank AB are associated (or correlated) with Partners Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partners Bank has no effect on the direction of Swedbank i.e., Swedbank and Partners Bank go up and down completely randomly.

Pair Corralation between Swedbank and Partners Bank

Assuming the 90 days horizon Swedbank AB is expected to generate 0.77 times more return on investment than Partners Bank. However, Swedbank AB is 1.3 times less risky than Partners Bank. It trades about 0.2 of its potential returns per unit of risk. Partners Bank of is currently generating about 0.0 per unit of risk. If you would invest  1,810  in Swedbank AB on December 30, 2024 and sell it today you would earn a total of  529.00  from holding Swedbank AB or generate 29.23% return on investment over 90 days.

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

Swedbank AB  vs.  Partners Bank of

Swedbank AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Swedbank showed solid returns over the last few months and may actually be approaching a breakup point.

Partners Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Partners Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Partners Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Swedbank and Partners Bank

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

The idea behind Swedbank AB and Partners Bank of 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.