Correlation Between Arista Power and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Arista Power and Nel ASA 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 Arista Power and Nel ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arista Power and Nel ASA, you can compare the effects of market volatilities on Arista Power and Nel ASA 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 Arista Power with a short position of Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arista Power and Nel ASA.
Diversification Opportunities for Arista Power and Nel ASA
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Arista and Nel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arista Power and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA and Arista Power 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 Arista Power are associated (or correlated) with Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Arista Power i.e., Arista Power and Nel ASA go up and down completely randomly.
Pair Corralation between Arista Power and Nel ASA
Given the investment horizon of 90 days Arista Power is expected to generate 0.4 times more return on investment than Nel ASA. However, Arista Power is 2.5 times less risky than Nel ASA. It trades about -0.04 of its potential returns per unit of risk. Nel ASA is currently generating about -0.03 per unit of risk. If you would invest 0.02 in Arista Power on January 13, 2025 and sell it today you would lose (0.01) from holding Arista Power or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arista Power vs. Nel ASA
Performance |
| Timeline |
| Arista Power |
| Nel ASA |
Arista Power and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arista Power and Nel ASA
The main advantage of trading using opposite Arista Power and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arista Power position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.| Arista Power vs. Aumann AG | Arista Power vs. Alfa Laval AB | Arista Power vs. Atlas Copco AB | Arista Power vs. American Commerce Solutions |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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