Correlation Between Fevertree Drinks and ROMERIKE SPAREBANK
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks and ROMERIKE SPAREBANK 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 Fevertree Drinks and ROMERIKE SPAREBANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks PLC and ROMERIKE SPAREBANK NK, you can compare the effects of market volatilities on Fevertree Drinks and ROMERIKE SPAREBANK 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 Fevertree Drinks with a short position of ROMERIKE SPAREBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and ROMERIKE SPAREBANK.
Diversification Opportunities for Fevertree Drinks and ROMERIKE SPAREBANK
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fevertree and ROMERIKE is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC and ROMERIKE SPAREBANK NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROMERIKE SPAREBANK and Fevertree Drinks 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 Fevertree Drinks PLC are associated (or correlated) with ROMERIKE SPAREBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROMERIKE SPAREBANK has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and ROMERIKE SPAREBANK go up and down completely randomly.
Pair Corralation between Fevertree Drinks and ROMERIKE SPAREBANK
Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to under-perform the ROMERIKE SPAREBANK. But the stock apears to be less risky and, when comparing its historical volatility, Fevertree Drinks PLC is 16.65 times less risky than ROMERIKE SPAREBANK. The stock trades about -0.05 of its potential returns per unit of risk. The ROMERIKE SPAREBANK NK is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,028 in ROMERIKE SPAREBANK NK on September 4, 2024 and sell it today you would earn a total of 42.00 from holding ROMERIKE SPAREBANK NK or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
Fevertree Drinks PLC vs. ROMERIKE SPAREBANK NK
Performance |
| Timeline |
| Fevertree Drinks PLC |
| ROMERIKE SPAREBANK |
Fevertree Drinks and ROMERIKE SPAREBANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and ROMERIKE SPAREBANK
The main advantage of trading using opposite Fevertree Drinks and ROMERIKE SPAREBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks position performs unexpectedly, ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK will offset losses from the drop in ROMERIKE SPAREBANK's long position.| Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc | Fevertree Drinks vs. Apple Inc |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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