Correlation Between Metsa Board and Metsa Board
Can any of the company-specific risk be diversified away by investing in both Metsa Board and Metsa Board 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 Metsa Board and Metsa Board into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metsa Board Oyj and Metsa Board Oyj, you can compare the effects of market volatilities on Metsa Board and Metsa Board 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 Metsa Board with a short position of Metsa Board. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metsa Board and Metsa Board.
Diversification Opportunities for Metsa Board and Metsa Board
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Metsa and Metsa is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Metsa Board Oyj and Metsa Board Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metsa Board Oyj and Metsa Board 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 Metsa Board Oyj are associated (or correlated) with Metsa Board. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metsa Board Oyj has no effect on the direction of Metsa Board i.e., Metsa Board and Metsa Board go up and down completely randomly.
Pair Corralation between Metsa Board and Metsa Board
Assuming the 90 days trading horizon Metsa Board Oyj is expected to under-perform the Metsa Board. In addition to that, Metsa Board is 1.11 times more volatile than Metsa Board Oyj. It trades about -0.42 of its total potential returns per unit of risk. Metsa Board Oyj is currently generating about -0.27 per unit of volatility. If you would invest 784.00 in Metsa Board Oyj on August 30, 2024 and sell it today you would lose (158.00) from holding Metsa Board Oyj or give up 20.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metsa Board Oyj vs. Metsa Board Oyj
Performance |
| Timeline |
| Metsa Board Oyj |
| Metsa Board Oyj |
Metsa Board and Metsa Board Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metsa Board and Metsa Board
The main advantage of trading using opposite Metsa Board and Metsa Board positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metsa Board position performs unexpectedly, Metsa Board 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 Metsa Board will offset losses from the drop in Metsa Board's long position.| Metsa Board vs. UPM Kymmene Oyj | Metsa Board vs. Stora Enso Oyj | Metsa Board vs. Valmet Oyj | Metsa Board vs. Wartsila Oyj Abp |
| Metsa Board vs. UPM Kymmene Oyj | Metsa Board vs. Stora Enso Oyj | Metsa Board vs. Metsa Board Oyj | Metsa Board vs. Valmet Oyj |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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