Correlation Between Spirent Communications and MOWI ASA
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and MOWI 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 Spirent Communications and MOWI ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and MOWI ASA SPADR, you can compare the effects of market volatilities on Spirent Communications and MOWI 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 Spirent Communications with a short position of MOWI ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and MOWI ASA.
Diversification Opportunities for Spirent Communications and MOWI ASA
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spirent and MOWI is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and MOWI ASA SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOWI ASA SPADR and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with MOWI ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOWI ASA SPADR has no effect on the direction of Spirent Communications i.e., Spirent Communications and MOWI ASA go up and down completely randomly.
Pair Corralation between Spirent Communications and MOWI ASA
Assuming the 90 days horizon Spirent Communications is expected to generate 2.27 times less return on investment than MOWI ASA. In addition to that, Spirent Communications is 2.49 times more volatile than MOWI ASA SPADR. It trades about 0.0 of its total potential returns per unit of risk. MOWI ASA SPADR is currently generating about 0.03 per unit of volatility. If you would invest 1,431 in MOWI ASA SPADR on September 12, 2024 and sell it today you would earn a total of 259.00 from holding MOWI ASA SPADR or generate 18.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. MOWI ASA SPADR
Performance |
| Timeline |
| Spirent Communications |
| MOWI ASA SPADR |
Spirent Communications and MOWI ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and MOWI ASA
The main advantage of trading using opposite Spirent Communications and MOWI ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, MOWI 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 MOWI ASA will offset losses from the drop in MOWI ASA's long position.| Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. SIVERS SEMICONDUCTORS AB | Spirent Communications vs. Norsk Hydro ASA | Spirent Communications vs. Reliance Steel Aluminum |
| MOWI ASA vs. Taylor Morrison Home | MOWI ASA vs. Universal Display | MOWI ASA vs. Verizon Communications | MOWI ASA vs. Spirent Communications plc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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