Correlation Between Integrated Wind and Deep Value
Can any of the company-specific risk be diversified away by investing in both Integrated Wind and Deep Value 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 Integrated Wind and Deep Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integrated Wind Solutions and Deep Value Driller, you can compare the effects of market volatilities on Integrated Wind and Deep Value 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 Integrated Wind with a short position of Deep Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Wind and Deep Value.
Diversification Opportunities for Integrated Wind and Deep Value
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Integrated and Deep is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Wind Solutions and Deep Value Driller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Value Driller and Integrated Wind 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 Integrated Wind Solutions are associated (or correlated) with Deep Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Value Driller has no effect on the direction of Integrated Wind i.e., Integrated Wind and Deep Value go up and down completely randomly.
Pair Corralation between Integrated Wind and Deep Value
Assuming the 90 days trading horizon Integrated Wind Solutions is expected to generate 1.5 times more return on investment than Deep Value. However, Integrated Wind is 1.5 times more volatile than Deep Value Driller. It trades about 0.04 of its potential returns per unit of risk. Deep Value Driller is currently generating about 0.03 per unit of risk. If you would invest 3,120 in Integrated Wind Solutions on September 12, 2024 and sell it today you would earn a total of 1,480 from holding Integrated Wind Solutions or generate 47.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Integrated Wind Solutions vs. Deep Value Driller
Performance |
| Timeline |
| Integrated Wind Solutions |
| Deep Value Driller |
Integrated Wind and Deep Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integrated Wind and Deep Value
The main advantage of trading using opposite Integrated Wind and Deep Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Wind position performs unexpectedly, Deep Value 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 Deep Value will offset losses from the drop in Deep Value's long position.| Integrated Wind vs. Edda Wind ASA | Integrated Wind vs. Cloudberry Clean Energy | Integrated Wind vs. Cadeler As | Integrated Wind vs. Otovo AS |
| Deep Value vs. Odfjell Drilling | Deep Value vs. NorAm Drilling AS | Deep Value vs. SD Standard Drilling | Deep Value vs. Kongsberg Gruppen ASA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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