Correlation Between Integrated Wind and North Energy
Can any of the company-specific risk be diversified away by investing in both Integrated Wind and North Energy 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 North Energy 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 North Energy ASA, you can compare the effects of market volatilities on Integrated Wind and North Energy 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 North Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Wind and North Energy.
Diversification Opportunities for Integrated Wind and North Energy
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Integrated and North is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Wind Solutions and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy ASA 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 North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Integrated Wind i.e., Integrated Wind and North Energy go up and down completely randomly.
Pair Corralation between Integrated Wind and North Energy
Assuming the 90 days trading horizon Integrated Wind Solutions is expected to generate 1.49 times more return on investment than North Energy. However, Integrated Wind is 1.49 times more volatile than North Energy ASA. It trades about 0.03 of its potential returns per unit of risk. North Energy ASA is currently generating about 0.04 per unit of risk. If you would invest 3,320 in Integrated Wind Solutions on November 9, 2024 and sell it today you would earn a total of 631.00 from holding Integrated Wind Solutions or generate 19.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Integrated Wind Solutions vs. North Energy ASA
Performance |
| Timeline |
| Integrated Wind Solutions |
| North Energy ASA |
Integrated Wind and North Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integrated Wind and North Energy
The main advantage of trading using opposite Integrated Wind and North Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Wind position performs unexpectedly, North Energy 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 North Energy will offset losses from the drop in North Energy'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 |
| North Energy vs. Melhus Sparebank | North Energy vs. Sparebank 1 SMN | North Energy vs. Sunndal Sparebank | North Energy vs. Arcticzymes Technologies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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