Correlation Between EIDESVIK OFFSHORE and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and Canadian Utilities 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 EIDESVIK OFFSHORE and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EIDESVIK OFFSHORE NK and Canadian Utilities Limited, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and Canadian Utilities 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 EIDESVIK OFFSHORE with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and Canadian Utilities.
Diversification Opportunities for EIDESVIK OFFSHORE and Canadian Utilities
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EIDESVIK and Canadian is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Canadian Utilities go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and Canadian Utilities
Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 2.7 times more return on investment than Canadian Utilities. However, EIDESVIK OFFSHORE is 2.7 times more volatile than Canadian Utilities Limited. It trades about 0.05 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about 0.02 per unit of risk. If you would invest 67.00 in EIDESVIK OFFSHORE NK on September 3, 2024 and sell it today you would earn a total of 43.00 from holding EIDESVIK OFFSHORE NK or generate 64.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. Canadian Utilities Limited
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| Canadian Utilities |
EIDESVIK OFFSHORE and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and Canadian Utilities
The main advantage of trading using opposite EIDESVIK OFFSHORE and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc |
| Canadian Utilities vs. MAVEN WIRELESS SWEDEN | Canadian Utilities vs. Citic Telecom International | Canadian Utilities vs. Tower One Wireless | Canadian Utilities vs. Chunghwa Telecom Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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