Correlation Between Rockwell Automation and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both Rockwell Automation and Vestas Wind 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 Rockwell Automation and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockwell Automation and Vestas Wind Systems, you can compare the effects of market volatilities on Rockwell Automation and Vestas Wind 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 Rockwell Automation with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwell Automation and Vestas Wind.
Diversification Opportunities for Rockwell Automation and Vestas Wind
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rockwell and Vestas is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Automation and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems and Rockwell Automation 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 Rockwell Automation are associated (or correlated) with Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Rockwell Automation i.e., Rockwell Automation and Vestas Wind go up and down completely randomly.
Pair Corralation between Rockwell Automation and Vestas Wind
Considering the 90-day investment horizon Rockwell Automation is expected to generate 0.68 times more return on investment than Vestas Wind. However, Rockwell Automation is 1.48 times less risky than Vestas Wind. It trades about 0.15 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.3 per unit of risk. If you would invest 26,645 in Rockwell Automation on August 25, 2024 and sell it today you would earn a total of 2,441 from holding Rockwell Automation or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rockwell Automation vs. Vestas Wind Systems
Performance |
| Timeline |
| Rockwell Automation |
| Vestas Wind Systems |
Rockwell Automation and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockwell Automation and Vestas Wind
The main advantage of trading using opposite Rockwell Automation and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Automation position performs unexpectedly, Vestas Wind 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 Vestas Wind will offset losses from the drop in Vestas Wind's long position.| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton PLC |
| Vestas Wind vs. Aumann AG | Vestas Wind vs. Arista Power | Vestas Wind vs. Atlas Copco AB | Vestas Wind vs. American Commerce Solutions |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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