Correlation Between EIDESVIK OFFSHORE and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and Fevertree Drinks.
Diversification Opportunities for EIDESVIK OFFSHORE and Fevertree Drinks
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EIDESVIK and Fevertree is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Fevertree Drinks go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and Fevertree Drinks
Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to generate 1.16 times more return on investment than Fevertree Drinks. However, EIDESVIK OFFSHORE is 1.16 times more volatile than Fevertree Drinks PLC. It trades about -0.04 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.11 per unit of risk. If you would invest 116.00 in EIDESVIK OFFSHORE NK on September 23, 2024 and sell it today you would lose (7.00) from holding EIDESVIK OFFSHORE NK or give up 6.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. Fevertree Drinks PLC
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| Fevertree Drinks PLC |
EIDESVIK OFFSHORE and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and Fevertree Drinks
The main advantage of trading using opposite EIDESVIK OFFSHORE and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| EIDESVIK OFFSHORE vs. AGF Management Limited | EIDESVIK OFFSHORE vs. SBI Insurance Group | EIDESVIK OFFSHORE vs. HANOVER INSURANCE | EIDESVIK OFFSHORE vs. Brockhaus Capital Management |
| Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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