Correlation Between MIPS AB and Eolus Vind
Can any of the company-specific risk be diversified away by investing in both MIPS AB and Eolus Vind 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 MIPS AB and Eolus Vind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MIPS AB and Eolus Vind AB, you can compare the effects of market volatilities on MIPS AB and Eolus Vind 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 MIPS AB with a short position of Eolus Vind. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIPS AB and Eolus Vind.
Diversification Opportunities for MIPS AB and Eolus Vind
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MIPS and Eolus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MIPS AB and Eolus Vind AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eolus Vind AB and MIPS AB 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 MIPS AB are associated (or correlated) with Eolus Vind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eolus Vind AB has no effect on the direction of MIPS AB i.e., MIPS AB and Eolus Vind go up and down completely randomly.
Pair Corralation between MIPS AB and Eolus Vind
Assuming the 90 days trading horizon MIPS AB is expected to generate 1.4 times more return on investment than Eolus Vind. However, MIPS AB is 1.4 times more volatile than Eolus Vind AB. It trades about 0.07 of its potential returns per unit of risk. Eolus Vind AB is currently generating about -0.07 per unit of risk. If you would invest 34,370 in MIPS AB on September 18, 2024 and sell it today you would earn a total of 12,850 from holding MIPS AB or generate 37.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
MIPS AB vs. Eolus Vind AB
Performance |
| Timeline |
| MIPS AB |
| Eolus Vind AB |
MIPS AB and Eolus Vind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MIPS AB and Eolus Vind
The main advantage of trading using opposite MIPS AB and Eolus Vind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MIPS AB position performs unexpectedly, Eolus Vind 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 Eolus Vind will offset losses from the drop in Eolus Vind's long position.The idea behind MIPS AB and Eolus Vind AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Eolus Vind vs. NOTE AB | Eolus Vind vs. Zaptec AS | Eolus Vind vs. SolTech Energy Sweden | Eolus Vind vs. Scatec Solar OL |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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