Correlation Between EIDESVIK OFFSHORE and Gap
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and Gap 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 Gap 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 The Gap, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and Gap 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 Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and Gap.
Diversification Opportunities for EIDESVIK OFFSHORE and Gap
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between EIDESVIK and Gap is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap 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 Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Gap go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and Gap
Assuming the 90 days horizon EIDESVIK OFFSHORE is expected to generate 10.05 times less return on investment than Gap. But when comparing it to its historical volatility, EIDESVIK OFFSHORE NK is 1.27 times less risky than Gap. It trades about 0.01 of its potential returns per unit of risk. The Gap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,275 in The Gap on November 3, 2024 and sell it today you would earn a total of 68.00 from holding The Gap or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. The Gap
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| Gap |
EIDESVIK OFFSHORE and Gap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and Gap
The main advantage of trading using opposite EIDESVIK OFFSHORE and Gap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, Gap 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 Gap will offset losses from the drop in Gap's long position.| EIDESVIK OFFSHORE vs. HELIOS TECHS INC | EIDESVIK OFFSHORE vs. BRIT AMER TOBACCO | EIDESVIK OFFSHORE vs. FORTRESS BIOTECHPRFA 25 | EIDESVIK OFFSHORE 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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