Correlation Between Prosafe SE and Otter Tail
Can any of the company-specific risk be diversified away by investing in both Prosafe SE and Otter Tail 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 Prosafe SE and Otter Tail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosafe SE and Otter Tail Corp, you can compare the effects of market volatilities on Prosafe SE and Otter Tail 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 Prosafe SE with a short position of Otter Tail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and Otter Tail.
Diversification Opportunities for Prosafe SE and Otter Tail
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prosafe and Otter is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and Otter Tail Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otter Tail Corp and Prosafe SE 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 Prosafe SE are associated (or correlated) with Otter Tail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otter Tail Corp has no effect on the direction of Prosafe SE i.e., Prosafe SE and Otter Tail go up and down completely randomly.
Pair Corralation between Prosafe SE and Otter Tail
Assuming the 90 days horizon Prosafe SE is expected to under-perform the Otter Tail. In addition to that, Prosafe SE is 4.3 times more volatile than Otter Tail Corp. It trades about -0.13 of its total potential returns per unit of risk. Otter Tail Corp is currently generating about 0.16 per unit of volatility. If you would invest 7,203 in Otter Tail Corp on November 28, 2024 and sell it today you would earn a total of 497.00 from holding Otter Tail Corp or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosafe SE vs. Otter Tail Corp
Performance |
| Timeline |
| Prosafe SE |
| Otter Tail Corp |
Prosafe SE and Otter Tail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosafe SE and Otter Tail
The main advantage of trading using opposite Prosafe SE and Otter Tail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE position performs unexpectedly, Otter Tail 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 Otter Tail will offset losses from the drop in Otter Tail's long position.| Prosafe SE vs. Burlington Stores | Prosafe SE vs. Fast Retailing Co | Prosafe SE vs. RETAIL FOOD GROUP | Prosafe SE vs. National Retail Properties |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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