Correlation Between ISFELAG HF and Lgerin Egill
Can any of the company-specific risk be diversified away by investing in both ISFELAG HF and Lgerin Egill 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 ISFELAG HF and Lgerin Egill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ISFELAG HF and lgerin Egill Skallagrmsson, you can compare the effects of market volatilities on ISFELAG HF and Lgerin Egill 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 ISFELAG HF with a short position of Lgerin Egill. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISFELAG HF and Lgerin Egill.
Diversification Opportunities for ISFELAG HF and Lgerin Egill
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between ISFELAG and Lgerin is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ISFELAG HF and lgerin Egill Skallagrmsson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on lgerin Egill Skallag and ISFELAG HF 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 ISFELAG HF are associated (or correlated) with Lgerin Egill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of lgerin Egill Skallag has no effect on the direction of ISFELAG HF i.e., ISFELAG HF and Lgerin Egill go up and down completely randomly.
Pair Corralation between ISFELAG HF and Lgerin Egill
Assuming the 90 days trading horizon ISFELAG HF is expected to generate 1.93 times less return on investment than Lgerin Egill. But when comparing it to its historical volatility, ISFELAG HF is 1.69 times less risky than Lgerin Egill. It trades about 0.07 of its potential returns per unit of risk. lgerin Egill Skallagrmsson is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,730 in lgerin Egill Skallagrmsson on August 25, 2024 and sell it today you would earn a total of 30.00 from holding lgerin Egill Skallagrmsson or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ISFELAG HF vs. lgerin Egill Skallagrmsson
Performance |
| Timeline |
| ISFELAG HF |
| lgerin Egill Skallag |
ISFELAG HF and Lgerin Egill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ISFELAG HF and Lgerin Egill
The main advantage of trading using opposite ISFELAG HF and Lgerin Egill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISFELAG HF position performs unexpectedly, Lgerin Egill 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 Lgerin Egill will offset losses from the drop in Lgerin Egill's long position.| ISFELAG HF vs. Arion banki hf | ISFELAG HF vs. Icelandair Group hf | ISFELAG HF vs. Iceland Seafood International | ISFELAG HF vs. Alvotech |
| Lgerin Egill vs. Arion banki hf | Lgerin Egill vs. Iceland Seafood International | Lgerin Egill vs. Kvika banki hf |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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