Correlation Between Bavarian Nordic and FLSmidth
Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic and FLSmidth 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 Bavarian Nordic and FLSmidth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bavarian Nordic and FLSmidth Co, you can compare the effects of market volatilities on Bavarian Nordic and FLSmidth 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 Bavarian Nordic with a short position of FLSmidth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and FLSmidth.
Diversification Opportunities for Bavarian Nordic and FLSmidth
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bavarian and FLSmidth is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and FLSmidth Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLSmidth and Bavarian Nordic 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 Bavarian Nordic are associated (or correlated) with FLSmidth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLSmidth has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and FLSmidth go up and down completely randomly.
Pair Corralation between Bavarian Nordic and FLSmidth
Assuming the 90 days trading horizon Bavarian Nordic is expected to under-perform the FLSmidth. In addition to that, Bavarian Nordic is 1.76 times more volatile than FLSmidth Co. It trades about -0.04 of its total potential returns per unit of risk. FLSmidth Co is currently generating about 0.2 per unit of volatility. If you would invest 35,780 in FLSmidth Co on November 5, 2024 and sell it today you would earn a total of 1,680 from holding FLSmidth Co or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bavarian Nordic vs. FLSmidth Co
Performance |
| Timeline |
| Bavarian Nordic |
| FLSmidth |
Bavarian Nordic and FLSmidth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bavarian Nordic and FLSmidth
The main advantage of trading using opposite Bavarian Nordic and FLSmidth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bavarian Nordic position performs unexpectedly, FLSmidth 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 FLSmidth will offset losses from the drop in FLSmidth's long position.| Bavarian Nordic vs. Ambu AS | Bavarian Nordic vs. Danske Bank AS | Bavarian Nordic vs. Genmab AS | Bavarian Nordic vs. DSV Panalpina AS |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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