Correlation Between Swedbank and Eniro AB

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

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

Diversification Opportunities for Swedbank and Eniro AB

-0.27

Correlation Coefficient

Swedbank  Eniro AB

Very good diversification

The 3 months correlation between Swedbank and Eniro is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Eniro AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eniro AB 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 Eniro AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eniro AB has no effect on the direction of Swedbank i.e., Swedbank and Eniro AB go up and down completely randomly.

Pair Corralation between Swedbank and Eniro AB

Assuming the 90 days trading horizon Swedbank AB is expected to under-perform the Eniro AB. But the stock apears to be less risky and, when comparing its historical volatility, Swedbank AB is 2.04 times less risky than Eniro AB. The stock trades about -0.03 of its potential returns per unit of risk. The Eniro AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Eniro AB on September 1, 2024 and sell it today you would earn a total of  4.00  from holding Eniro AB or generate 9.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Swedbank AB  vs.  Eniro AB

Swedbank AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swedbank AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Swedbank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Eniro AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eniro AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eniro AB may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Swedbank and Eniro AB

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

The idea behind Swedbank AB and Eniro AB 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.