Correlation Between Fortum Oyj and VERBUND AG
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and VERBUND AG 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 Fortum Oyj and VERBUND AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and VERBUND AG ADR, you can compare the effects of market volatilities on Fortum Oyj and VERBUND AG 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 Fortum Oyj with a short position of VERBUND AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and VERBUND AG.
Diversification Opportunities for Fortum Oyj and VERBUND AG
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortum and VERBUND is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and VERBUND AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERBUND AG ADR and Fortum Oyj 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 Fortum Oyj are associated (or correlated) with VERBUND AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERBUND AG ADR has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and VERBUND AG go up and down completely randomly.
Pair Corralation between Fortum Oyj and VERBUND AG
Assuming the 90 days horizon Fortum Oyj is expected to generate 0.91 times more return on investment than VERBUND AG. However, Fortum Oyj is 1.1 times less risky than VERBUND AG. It trades about 0.0 of its potential returns per unit of risk. VERBUND AG ADR is currently generating about -0.03 per unit of risk. If you would invest 1,391 in Fortum Oyj on November 2, 2024 and sell it today you would lose (22.00) from holding Fortum Oyj or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.04% |
| Values | Daily Returns |
Fortum Oyj vs. VERBUND AG ADR
Performance |
| Timeline |
| Fortum Oyj |
| VERBUND AG ADR |
Fortum Oyj and VERBUND AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and VERBUND AG
The main advantage of trading using opposite Fortum Oyj and VERBUND AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, VERBUND AG 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 VERBUND AG will offset losses from the drop in VERBUND AG's long position.| Fortum Oyj vs. Ormat Technologies | Fortum Oyj vs. Neoen SA | Fortum Oyj vs. Encavis AG | Fortum Oyj vs. TOHOKU EL PWR |
| VERBUND AG vs. TOMBADOR IRON LTD | VERBUND AG vs. MOUNT GIBSON IRON | VERBUND AG vs. Penta Ocean Construction Co | VERBUND AG vs. KOBE STEEL LTD |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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