Correlation Between Gates Industrial and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both Gates Industrial and Wartsila Oyj 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 Gates Industrial and Wartsila Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gates Industrial and Wartsila Oyj Abp, you can compare the effects of market volatilities on Gates Industrial and Wartsila Oyj 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 Gates Industrial with a short position of Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gates Industrial and Wartsila Oyj.
Diversification Opportunities for Gates Industrial and Wartsila Oyj
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gates and Wartsila is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gates Industrial and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp and Gates Industrial 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 Gates Industrial are associated (or correlated) with Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of Gates Industrial i.e., Gates Industrial and Wartsila Oyj go up and down completely randomly.
Pair Corralation between Gates Industrial and Wartsila Oyj
Given the investment horizon of 90 days Gates Industrial is expected to generate 1.13 times less return on investment than Wartsila Oyj. But when comparing it to its historical volatility, Gates Industrial is 1.92 times less risky than Wartsila Oyj. It trades about 0.09 of its potential returns per unit of risk. Wartsila Oyj Abp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 236.00 in Wartsila Oyj Abp on September 4, 2024 and sell it today you would earn a total of 123.00 from holding Wartsila Oyj Abp or generate 52.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.06% |
| Values | Daily Returns |
Gates Industrial vs. Wartsila Oyj Abp
Performance |
| Timeline |
| Gates Industrial |
| Wartsila Oyj Abp |
Gates Industrial and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gates Industrial and Wartsila Oyj
The main advantage of trading using opposite Gates Industrial and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gates Industrial position performs unexpectedly, Wartsila Oyj 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 Wartsila Oyj will offset losses from the drop in Wartsila Oyj's long position.| Gates Industrial vs. Crane NXT Co | Gates Industrial vs. Donaldson | Gates Industrial vs. ITT Inc | Gates Industrial vs. Franklin Electric Co |
| Wartsila Oyj vs. Dear Cashmere Holding | Wartsila Oyj vs. Goff Corp | Wartsila Oyj vs. Wialan Technologies | Wartsila Oyj vs. Cgrowth Capital |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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