Correlation Between Solstad Offshore and Ecofin Global
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Ecofin Global 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 Solstad Offshore and Ecofin Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offshore ASA and Ecofin Global Utilities, you can compare the effects of market volatilities on Solstad Offshore and Ecofin Global 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 Solstad Offshore with a short position of Ecofin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Ecofin Global.
Diversification Opportunities for Solstad Offshore and Ecofin Global
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solstad and Ecofin is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Ecofin Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Utilities and Solstad Offshore 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 Solstad Offshore ASA are associated (or correlated) with Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Utilities has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Ecofin Global go up and down completely randomly.
Pair Corralation between Solstad Offshore and Ecofin Global
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 3.2 times more return on investment than Ecofin Global. However, Solstad Offshore is 3.2 times more volatile than Ecofin Global Utilities. It trades about 0.02 of its potential returns per unit of risk. Ecofin Global Utilities is currently generating about -0.02 per unit of risk. If you would invest 3,847 in Solstad Offshore ASA on October 10, 2024 and sell it today you would earn a total of 113.00 from holding Solstad Offshore ASA or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Ecofin Global Utilities
Performance |
| Timeline |
| Solstad Offshore ASA |
| Ecofin Global Utilities |
Solstad Offshore and Ecofin Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Ecofin Global
The main advantage of trading using opposite Solstad Offshore and Ecofin Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Ecofin Global 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 Ecofin Global will offset losses from the drop in Ecofin Global's long position.| Solstad Offshore vs. Veolia Environnement VE | Solstad Offshore vs. Beowulf Mining | Solstad Offshore vs. Tata Steel Limited | Solstad Offshore vs. Thor Mining PLC |
| Ecofin Global vs. AcadeMedia AB | Ecofin Global vs. Ashtead Technology Holdings | Ecofin Global vs. SMA Solar Technology | Ecofin Global vs. Aptitude Software Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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