Correlation Between IDEX and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both IDEX 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 IDEX and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDEX Corporation and Vestas Wind Systems, you can compare the effects of market volatilities on IDEX 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 IDEX with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDEX and Vestas Wind.
Diversification Opportunities for IDEX and Vestas Wind
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IDEX and Vestas is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Corp. 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 IDEX 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 IDEX Corporation 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 IDEX i.e., IDEX and Vestas Wind go up and down completely randomly.
Pair Corralation between IDEX and Vestas Wind
Considering the 90-day investment horizon IDEX Corporation is expected to generate 0.52 times more return on investment than Vestas Wind. However, IDEX Corporation is 1.93 times less risky than Vestas Wind. It trades about -0.03 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.08 per unit of risk. If you would invest 22,404 in IDEX Corporation on November 8, 2024 and sell it today you would lose (2,646) from holding IDEX Corporation or give up 11.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDEX Corp. vs. Vestas Wind Systems
Performance |
| Timeline |
| IDEX |
| Vestas Wind Systems |
IDEX and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDEX and Vestas Wind
The main advantage of trading using opposite IDEX and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDEX 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.The idea behind IDEX Corporation and Vestas Wind Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Vestas Wind vs. KONE Oyj | Vestas Wind vs. Spirax Sarco Engineering PLC | Vestas Wind vs. Atlas Copco ADR | Vestas Wind vs. IDEX Corporation |
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.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges |