Correlation Between Graco and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both Graco 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 Graco and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graco Inc and Vestas Wind Systems, you can compare the effects of market volatilities on Graco 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 Graco with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graco and Vestas Wind.
Diversification Opportunities for Graco and Vestas Wind
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Graco and Vestas is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc 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 Graco 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 Graco Inc 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 Graco i.e., Graco and Vestas Wind go up and down completely randomly.
Pair Corralation between Graco and Vestas Wind
Considering the 90-day investment horizon Graco Inc is expected to generate 0.52 times more return on investment than Vestas Wind. However, Graco Inc is 1.94 times less risky than Vestas Wind. It trades about 0.04 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.06 per unit of risk. If you would invest 7,691 in Graco Inc on August 29, 2024 and sell it today you would earn a total of 1,370 from holding Graco Inc or generate 17.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graco Inc vs. Vestas Wind Systems
Performance |
| Timeline |
| Graco Inc |
| Vestas Wind Systems |
Graco and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graco and Vestas Wind
The main advantage of trading using opposite Graco and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco 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.| Graco vs. Aquagold International | Graco vs. Morningstar Unconstrained Allocation | Graco vs. High Yield Municipal Fund | Graco vs. Thrivent High Yield |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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