Correlation Between Integrated Wind and Lifecare
Can any of the company-specific risk be diversified away by investing in both Integrated Wind and Lifecare 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 Lifecare 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 Lifecare AS, you can compare the effects of market volatilities on Integrated Wind and Lifecare 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 Lifecare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Wind and Lifecare.
Diversification Opportunities for Integrated Wind and Lifecare
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Integrated and Lifecare is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Wind Solutions and Lifecare AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifecare AS 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 Lifecare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifecare AS has no effect on the direction of Integrated Wind i.e., Integrated Wind and Lifecare go up and down completely randomly.
Pair Corralation between Integrated Wind and Lifecare
Assuming the 90 days trading horizon Integrated Wind Solutions is expected to generate 0.32 times more return on investment than Lifecare. However, Integrated Wind Solutions is 3.17 times less risky than Lifecare. It trades about -0.08 of its potential returns per unit of risk. Lifecare AS is currently generating about -0.16 per unit of risk. If you would invest 5,050 in Integrated Wind Solutions on September 2, 2024 and sell it today you would lose (170.00) from holding Integrated Wind Solutions or give up 3.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Integrated Wind Solutions vs. Lifecare AS
Performance |
| Timeline |
| Integrated Wind Solutions |
| Lifecare AS |
Integrated Wind and Lifecare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integrated Wind and Lifecare
The main advantage of trading using opposite Integrated Wind and Lifecare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Wind position performs unexpectedly, Lifecare 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 Lifecare will offset losses from the drop in Lifecare'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 |
| Lifecare vs. Elkem ASA | Lifecare vs. Integrated Wind Solutions | Lifecare vs. Vow ASA | Lifecare vs. North Energy 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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