Correlation Between Alandsbanken Abp and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both Alandsbanken Abp and Wartsila Oyj 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 Alandsbanken Abp and Wartsila Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alandsbanken Abp B and Wartsila Oyj Abp, you can compare the effects of market volatilities on Alandsbanken Abp and Wartsila Oyj 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 Alandsbanken Abp with a short position of Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alandsbanken Abp and Wartsila Oyj.
Diversification Opportunities for Alandsbanken Abp and Wartsila Oyj
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alandsbanken and Wartsila is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp B and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp and Alandsbanken Abp 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 Alandsbanken Abp B are associated (or correlated) with Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of Alandsbanken Abp i.e., Alandsbanken Abp and Wartsila Oyj go up and down completely randomly.
Pair Corralation between Alandsbanken Abp and Wartsila Oyj
Assuming the 90 days trading horizon Alandsbanken Abp is expected to generate 11.7 times less return on investment than Wartsila Oyj. But when comparing it to its historical volatility, Alandsbanken Abp B is 1.54 times less risky than Wartsila Oyj. It trades about 0.01 of its potential returns per unit of risk. Wartsila Oyj Abp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,396 in Wartsila Oyj Abp on August 25, 2024 and sell it today you would earn a total of 387.00 from holding Wartsila Oyj Abp or generate 27.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alandsbanken Abp B vs. Wartsila Oyj Abp
Performance |
| Timeline |
| Alandsbanken Abp B |
| Wartsila Oyj Abp |
Alandsbanken Abp and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alandsbanken Abp and Wartsila Oyj
The main advantage of trading using opposite Alandsbanken Abp and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alandsbanken Abp position performs unexpectedly, Wartsila Oyj 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 Wartsila Oyj will offset losses from the drop in Wartsila Oyj's long position.| Alandsbanken Abp vs. Nordea Bank Abp | Alandsbanken Abp vs. Fortum Oyj | Alandsbanken Abp vs. UPM Kymmene Oyj | Alandsbanken Abp vs. Neste Oil Oyj |
| Wartsila Oyj vs. Aktia Bank Abp | Wartsila Oyj vs. Alandsbanken Abp B | Wartsila Oyj vs. Alandsbanken Abp A | Wartsila Oyj vs. Sampo Oyj A |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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