Correlation Between Svenska Cellulosa and Enviva Partners

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

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

Diversification Opportunities for Svenska Cellulosa and Enviva Partners

-0.28

Correlation Coefficient

Svenska Cellulosa  Enviva Partners

Very good diversification

The 3 months correlation between Svenska and Enviva is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Cellulosa Aktiebolaget and Enviva Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enviva Partners LP and Svenska Cellulosa 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 Svenska Cellulosa Aktiebolaget are associated (or correlated) with Enviva Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enviva Partners LP has no effect on the direction of Svenska Cellulosa i.e., Svenska Cellulosa and Enviva Partners go up and down completely randomly.

Pair Corralation between Svenska Cellulosa and Enviva Partners

If you would invest  42.00  in Enviva Partners LP on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Enviva Partners LP or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Svenska Cellulosa Aktiebolaget  vs.  Enviva Partners LP

Svenska Cellulosa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Svenska Cellulosa Aktiebolaget has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Enviva Partners LP

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days Enviva Partners LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat inconsistent basic indicators, Enviva Partners sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Svenska Cellulosa and Enviva Partners

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

The idea behind Svenska Cellulosa Aktiebolaget and Enviva Partners LP 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.