Correlation Between Fanuc and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both Fanuc and Vestas Wind 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 Fanuc and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fanuc and Vestas Wind Systems, you can compare the effects of market volatilities on Fanuc and Vestas Wind 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 Fanuc with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanuc and Vestas Wind.
Diversification Opportunities for Fanuc and Vestas Wind
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fanuc and Vestas is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fanuc and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems and Fanuc 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 Fanuc are associated (or correlated) with Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Fanuc i.e., Fanuc and Vestas Wind go up and down completely randomly.
Pair Corralation between Fanuc and Vestas Wind
Assuming the 90 days horizon Fanuc is expected to generate 1.19 times more return on investment than Vestas Wind. However, Fanuc is 1.19 times more volatile than Vestas Wind Systems. It trades about 0.0 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.23 per unit of risk. If you would invest 2,620 in Fanuc on August 31, 2024 and sell it today you would lose (82.00) from holding Fanuc or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fanuc vs. Vestas Wind Systems
Performance |
| Timeline |
| Fanuc |
| Vestas Wind Systems |
Fanuc and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fanuc and Vestas Wind
The main advantage of trading using opposite Fanuc and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fanuc position performs unexpectedly, Vestas Wind 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 Vestas Wind will offset losses from the drop in Vestas Wind's long position.The idea behind Fanuc and Vestas Wind Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Vestas Wind vs. Kone Oyj ADR | Vestas Wind vs. Schneider Electric SE | Vestas Wind vs. Schneider Electric SA | Vestas Wind vs. Fanuc |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |