Correlation Between COMMERCIAL VEHICLE and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMMERCIAL VEHICLE and Vestas Wind Systems, you can compare the effects of market volatilities on COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMMERCIAL VEHICLE and Vestas Wind.
Diversification Opportunities for COMMERCIAL VEHICLE and Vestas Wind
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between COMMERCIAL and Vestas is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE i.e., COMMERCIAL VEHICLE and Vestas Wind go up and down completely randomly.
Pair Corralation between COMMERCIAL VEHICLE and Vestas Wind
Assuming the 90 days trading horizon COMMERCIAL VEHICLE is expected to under-perform the Vestas Wind. In addition to that, COMMERCIAL VEHICLE is 1.26 times more volatile than Vestas Wind Systems. It trades about -0.05 of its total potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.04 per unit of volatility. If you would invest 2,725 in Vestas Wind Systems on September 3, 2024 and sell it today you would lose (1,268) from holding Vestas Wind Systems or give up 46.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
COMMERCIAL VEHICLE vs. Vestas Wind Systems
Performance |
| Timeline |
| COMMERCIAL VEHICLE |
| Vestas Wind Systems |
COMMERCIAL VEHICLE and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMMERCIAL VEHICLE and Vestas Wind
The main advantage of trading using opposite COMMERCIAL VEHICLE and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMMERCIAL VEHICLE 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.| COMMERCIAL VEHICLE vs. JD SPORTS FASH | COMMERCIAL VEHICLE vs. ARISTOCRAT LEISURE | COMMERCIAL VEHICLE vs. United Utilities Group | COMMERCIAL VEHICLE vs. Columbia Sportswear |
| Vestas Wind vs. Sixt Leasing SE | Vestas Wind vs. COMMERCIAL VEHICLE | Vestas Wind vs. Cars Inc | Vestas Wind vs. Diamyd Medical AB |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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