Correlation Between Swedbank and Intrum Justitia

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

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

Diversification Opportunities for Swedbank and Intrum Justitia

0.19

Correlation Coefficient

Swedbank  Intrum Justitia

Average diversification

The 3 months correlation between Swedbank and Intrum is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Intrum Justitia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrum Justitia 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 Intrum Justitia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrum Justitia AB has no effect on the direction of Swedbank i.e., Swedbank and Intrum Justitia go up and down completely randomly.

Pair Corralation between Swedbank and Intrum Justitia

Assuming the 90 days trading horizon Swedbank AB is expected to generate 0.38 times more return on investment than Intrum Justitia. However, Swedbank AB is 2.62 times less risky than Intrum Justitia. It trades about 0.19 of its potential returns per unit of risk. Intrum Justitia AB is currently generating about 0.01 per unit of risk. If you would invest  19,977  in Swedbank AB on December 30, 2024 and sell it today you would earn a total of  3,213  from holding Swedbank AB or generate 16.08% return on investment over 90 days.

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

Swedbank AB  vs.  Intrum Justitia AB

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. Despite somewhat uncertain technical and fundamental indicators, Swedbank sustained solid returns over the last few months and may actually be approaching a breakup point.

Intrum Justitia AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intrum Justitia AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Intrum Justitia 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 Intrum Justitia

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

The idea behind Swedbank AB and Intrum Justitia 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.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.