Correlation Between Stora Enso and Mondi PLC
Can any of the company-specific risk be diversified away by investing in both Stora Enso and Mondi PLC 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 Stora Enso and Mondi PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stora Enso Oyj and Mondi PLC ADR, you can compare the effects of market volatilities on Stora Enso and Mondi PLC 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 Stora Enso with a short position of Mondi PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stora Enso and Mondi PLC.
Diversification Opportunities for Stora Enso and Mondi PLC
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stora and Mondi is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stora Enso Oyj and Mondi PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondi PLC ADR and Stora Enso 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 Stora Enso Oyj are associated (or correlated) with Mondi PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondi PLC ADR has no effect on the direction of Stora Enso i.e., Stora Enso and Mondi PLC go up and down completely randomly.
Pair Corralation between Stora Enso and Mondi PLC
If you would invest 1,120 in Stora Enso Oyj on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Stora Enso Oyj or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Stora Enso Oyj vs. Mondi PLC ADR
Performance |
| Timeline |
| Stora Enso Oyj |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Mondi PLC ADR |
Stora Enso and Mondi PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stora Enso and Mondi PLC
The main advantage of trading using opposite Stora Enso and Mondi PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stora Enso position performs unexpectedly, Mondi PLC 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 Mondi PLC will offset losses from the drop in Mondi PLC's long position.| Stora Enso vs. Nine Dragons Paper | Stora Enso vs. Canfor Pulp Products | Stora Enso vs. Mondi PLC ADR | Stora Enso vs. Clearwater Paper |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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