Correlation Between First State and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both First State 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 First State and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First State Financial and Vestas Wind Systems, you can compare the effects of market volatilities on First State 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 First State with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of First State and Vestas Wind.
Diversification Opportunities for First State and Vestas Wind
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Vestas is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding First State Financial 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 First State 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 First State Financial 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 First State i.e., First State and Vestas Wind go up and down completely randomly.
Pair Corralation between First State and Vestas Wind
If you would invest 4.47 in First State Financial on August 29, 2024 and sell it today you would earn a total of 0.00 from holding First State Financial or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
First State Financial vs. Vestas Wind Systems
Performance |
| Timeline |
| First State Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Vestas Wind Systems |
First State and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First State and Vestas Wind
The main advantage of trading using opposite First State and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First State 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.| First State vs. First Interstate BancSystem | First State vs. First Financial Bankshares | First State vs. Independent Bank Group | First State vs. CVB Financial |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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