Correlation Between Icelandic Salmon and Iceland Seafood
Can any of the company-specific risk be diversified away by investing in both Icelandic Salmon and Iceland Seafood 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 Icelandic Salmon and Iceland Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icelandic Salmon AS and Iceland Seafood International, you can compare the effects of market volatilities on Icelandic Salmon and Iceland Seafood 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 Icelandic Salmon with a short position of Iceland Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icelandic Salmon and Iceland Seafood.
Diversification Opportunities for Icelandic Salmon and Iceland Seafood
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Icelandic and Iceland is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Icelandic Salmon AS and Iceland Seafood International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iceland Seafood Inte and Icelandic Salmon 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 Icelandic Salmon AS are associated (or correlated) with Iceland Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iceland Seafood Inte has no effect on the direction of Icelandic Salmon i.e., Icelandic Salmon and Iceland Seafood go up and down completely randomly.
Pair Corralation between Icelandic Salmon and Iceland Seafood
Assuming the 90 days trading horizon Icelandic Salmon AS is expected to generate 1.28 times more return on investment than Iceland Seafood. However, Icelandic Salmon is 1.28 times more volatile than Iceland Seafood International. It trades about 0.01 of its potential returns per unit of risk. Iceland Seafood International is currently generating about -0.11 per unit of risk. If you would invest 150,000 in Icelandic Salmon AS on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Icelandic Salmon AS or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Icelandic Salmon AS vs. Iceland Seafood International
Performance |
| Timeline |
| Icelandic Salmon |
| Iceland Seafood Inte |
Icelandic Salmon and Iceland Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icelandic Salmon and Iceland Seafood
The main advantage of trading using opposite Icelandic Salmon and Iceland Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icelandic Salmon position performs unexpectedly, Iceland Seafood 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 Iceland Seafood will offset losses from the drop in Iceland Seafood's long position.| Icelandic Salmon vs. slandsbanki hf | Icelandic Salmon vs. Iceland Seafood International | Icelandic Salmon vs. Kvika banki hf | Icelandic Salmon vs. Icelandair Group hf |
| Iceland Seafood vs. Arion banki hf | Iceland Seafood vs. Alvotech | Iceland Seafood vs. Icelandair Group hf | Iceland Seafood 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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