Correlation Between DnB ASA and Var Energi
Can any of the company-specific risk be diversified away by investing in both DnB ASA and Var Energi 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 DnB ASA and Var Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DnB ASA and Var Energi ASA, you can compare the effects of market volatilities on DnB ASA and Var Energi 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 DnB ASA with a short position of Var Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of DnB ASA and Var Energi.
Diversification Opportunities for DnB ASA and Var Energi
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DnB and Var is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding DnB ASA and Var Energi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Var Energi ASA and DnB ASA 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 DnB ASA are associated (or correlated) with Var Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Var Energi ASA has no effect on the direction of DnB ASA i.e., DnB ASA and Var Energi go up and down completely randomly.
Pair Corralation between DnB ASA and Var Energi
Assuming the 90 days trading horizon DnB ASA is expected to generate 0.6 times more return on investment than Var Energi. However, DnB ASA is 1.66 times less risky than Var Energi. It trades about 0.08 of its potential returns per unit of risk. Var Energi ASA is currently generating about 0.04 per unit of risk. If you would invest 18,392 in DnB ASA on September 1, 2024 and sell it today you would earn a total of 4,678 from holding DnB ASA or generate 25.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
DnB ASA vs. Var Energi ASA
Performance |
| Timeline |
| DnB ASA |
| Var Energi ASA |
DnB ASA and Var Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DnB ASA and Var Energi
The main advantage of trading using opposite DnB ASA and Var Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DnB ASA position performs unexpectedly, Var Energi 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 Var Energi will offset losses from the drop in Var Energi's long position.| DnB ASA vs. Telenor ASA | DnB ASA vs. Storebrand ASA | DnB ASA vs. Orkla ASA | DnB ASA vs. Gjensidige Forsikring ASA |
| Var Energi vs. Aker BP ASA | Var Energi vs. Belships | Var Energi vs. MPC Container Ships | Var Energi vs. BW Energy |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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