Correlation Between Northgold and Eolus Vind
Can any of the company-specific risk be diversified away by investing in both Northgold 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 Northgold and Eolus Vind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northgold AB and Eolus Vind AB, you can compare the effects of market volatilities on Northgold 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 Northgold with a short position of Eolus Vind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northgold and Eolus Vind.
Diversification Opportunities for Northgold and Eolus Vind
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northgold and Eolus is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Northgold 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 Northgold 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 Northgold 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 Northgold i.e., Northgold and Eolus Vind go up and down completely randomly.
Pair Corralation between Northgold and Eolus Vind
Assuming the 90 days horizon Northgold AB is expected to under-perform the Eolus Vind. In addition to that, Northgold is 1.23 times more volatile than Eolus Vind AB. It trades about -0.21 of its total potential returns per unit of risk. Eolus Vind AB is currently generating about -0.04 per unit of volatility. If you would invest 4,775 in Eolus Vind AB on August 26, 2024 and sell it today you would lose (175.00) from holding Eolus Vind AB or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northgold AB vs. Eolus Vind AB
Performance |
| Timeline |
| Northgold AB |
| Eolus Vind AB |
Northgold and Eolus Vind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northgold and Eolus Vind
The main advantage of trading using opposite Northgold and Eolus Vind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northgold 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.| Northgold vs. Arctic Gold Publ | Northgold vs. Avensia publ AB | Northgold vs. KABE Group AB | Northgold vs. IAR Systems Group |
| Eolus Vind vs. Lifco AB | Eolus Vind vs. Sdiptech AB | Eolus Vind vs. Vitec Software Group | Eolus Vind vs. Addtech AB |
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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