Correlation Between FLSmidth and Moens Bank
Can any of the company-specific risk be diversified away by investing in both FLSmidth and Moens Bank 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 FLSmidth and Moens Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLSmidth Co and Moens Bank AS, you can compare the effects of market volatilities on FLSmidth and Moens Bank 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 FLSmidth with a short position of Moens Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLSmidth and Moens Bank.
Diversification Opportunities for FLSmidth and Moens Bank
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FLSmidth and Moens is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding FLSmidth Co and Moens Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moens Bank AS and FLSmidth 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 FLSmidth Co are associated (or correlated) with Moens Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moens Bank AS has no effect on the direction of FLSmidth i.e., FLSmidth and Moens Bank go up and down completely randomly.
Pair Corralation between FLSmidth and Moens Bank
Assuming the 90 days trading horizon FLSmidth is expected to generate 10.53 times less return on investment than Moens Bank. But when comparing it to its historical volatility, FLSmidth Co is 1.93 times less risky than Moens Bank. It trades about 0.02 of its potential returns per unit of risk. Moens Bank AS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 21,800 in Moens Bank AS on September 20, 2024 and sell it today you would earn a total of 800.00 from holding Moens Bank AS or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLSmidth Co vs. Moens Bank AS
Performance |
| Timeline |
| FLSmidth |
| Moens Bank AS |
FLSmidth and Moens Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLSmidth and Moens Bank
The main advantage of trading using opposite FLSmidth and Moens Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLSmidth position performs unexpectedly, Moens Bank 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 Moens Bank will offset losses from the drop in Moens Bank's long position.The idea behind FLSmidth Co and Moens Bank AS 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.| Moens Bank vs. FLSmidth Co | Moens Bank vs. Danske Bank AS | Moens Bank vs. ISS AS | Moens Bank vs. DSV Panalpina AS |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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