Correlation Between AstraZeneca PLC and AB Volvo
Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC and AB Volvo 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 AstraZeneca PLC and AB Volvo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstraZeneca PLC and AB Volvo, you can compare the effects of market volatilities on AstraZeneca PLC and AB Volvo 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 AstraZeneca PLC with a short position of AB Volvo. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and AB Volvo.
Diversification Opportunities for AstraZeneca PLC and AB Volvo
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AstraZeneca and VOLV-B is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo and AstraZeneca PLC 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 AstraZeneca PLC are associated (or correlated) with AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and AB Volvo go up and down completely randomly.
Pair Corralation between AstraZeneca PLC and AB Volvo
Assuming the 90 days trading horizon AstraZeneca PLC is expected to generate 1.01 times more return on investment than AB Volvo. However, AstraZeneca PLC is 1.01 times more volatile than AB Volvo. It trades about 0.4 of its potential returns per unit of risk. AB Volvo is currently generating about -0.19 per unit of risk. If you would invest 142,600 in AstraZeneca PLC on February 7, 2024 and sell it today you would earn a total of 20,800 from holding AstraZeneca PLC or generate 14.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AstraZeneca PLC vs. AB Volvo
Performance |
Timeline |
AstraZeneca PLC |
AB Volvo |
AstraZeneca PLC and AB Volvo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AstraZeneca PLC and AB Volvo
The main advantage of trading using opposite AstraZeneca PLC and AB Volvo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstraZeneca PLC position performs unexpectedly, AB Volvo 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 AB Volvo will offset losses from the drop in AB Volvo's long position.AstraZeneca PLC vs. AB Volvo | AstraZeneca PLC vs. Telefonaktiebolaget LM Ericsson | AstraZeneca PLC vs. H M Hennes | AstraZeneca PLC vs. Investor AB ser |
AB Volvo vs. AstraZeneca PLC | AB Volvo vs. H M Hennes | AB Volvo vs. Telefonaktiebolaget LM Ericsson | AB Volvo vs. Investor AB ser |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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