Correlation Between Eco Animal and Sparebanken Vest
Can any of the company-specific risk be diversified away by investing in both Eco Animal and Sparebanken Vest 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 Eco Animal and Sparebanken Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eco Animal Health and Sparebanken Vest, you can compare the effects of market volatilities on Eco Animal and Sparebanken Vest 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 Eco Animal with a short position of Sparebanken Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco Animal and Sparebanken Vest.
Diversification Opportunities for Eco Animal and Sparebanken Vest
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eco and Sparebanken is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eco Animal Health and Sparebanken Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Vest and Eco Animal 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 Eco Animal Health are associated (or correlated) with Sparebanken Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Vest has no effect on the direction of Eco Animal i.e., Eco Animal and Sparebanken Vest go up and down completely randomly.
Pair Corralation between Eco Animal and Sparebanken Vest
Assuming the 90 days trading horizon Eco Animal Health is expected to under-perform the Sparebanken Vest. But the stock apears to be less risky and, when comparing its historical volatility, Eco Animal Health is 1.12 times less risky than Sparebanken Vest. The stock trades about -0.11 of its potential returns per unit of risk. The Sparebanken Vest is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 13,000 in Sparebanken Vest on October 11, 2024 and sell it today you would earn a total of 1,180 from holding Sparebanken Vest or generate 9.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Eco Animal Health vs. Sparebanken Vest
Performance |
| Timeline |
| Eco Animal Health |
| Sparebanken Vest |
Eco Animal and Sparebanken Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eco Animal and Sparebanken Vest
The main advantage of trading using opposite Eco Animal and Sparebanken Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco Animal position performs unexpectedly, Sparebanken Vest 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 Sparebanken Vest will offset losses from the drop in Sparebanken Vest's long position.| Eco Animal vs. Wheaton Precious Metals | Eco Animal vs. URU Metals | Eco Animal vs. Universal Display Corp | Eco Animal vs. American Homes 4 |
| Sparebanken Vest vs. Trellus Health plc | Sparebanken Vest vs. Cardinal Health | Sparebanken Vest vs. Eco Animal Health | Sparebanken Vest vs. Future Metals NL |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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