Correlation Between Spirax-Sarco Engineering and Nordex SE
Can any of the company-specific risk be diversified away by investing in both Spirax-Sarco Engineering and Nordex SE 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 Spirax-Sarco Engineering and Nordex SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirax Sarco Engineering PLC and Nordex SE, you can compare the effects of market volatilities on Spirax-Sarco Engineering and Nordex SE 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 Spirax-Sarco Engineering with a short position of Nordex SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirax-Sarco Engineering and Nordex SE.
Diversification Opportunities for Spirax-Sarco Engineering and Nordex SE
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spirax-Sarco and Nordex is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Spirax Sarco Engineering PLC and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE and Spirax-Sarco Engineering 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 Spirax Sarco Engineering PLC are associated (or correlated) with Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of Spirax-Sarco Engineering i.e., Spirax-Sarco Engineering and Nordex SE go up and down completely randomly.
Pair Corralation between Spirax-Sarco Engineering and Nordex SE
Assuming the 90 days horizon Spirax Sarco Engineering PLC is expected to under-perform the Nordex SE. In addition to that, Spirax-Sarco Engineering is 1.54 times more volatile than Nordex SE. It trades about -0.11 of its total potential returns per unit of risk. Nordex SE is currently generating about 0.06 per unit of volatility. If you would invest 675.00 in Nordex SE on August 25, 2024 and sell it today you would earn a total of 63.00 from holding Nordex SE or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirax Sarco Engineering PLC vs. Nordex SE
Performance |
| Timeline |
| Spirax-Sarco Engineering |
| Nordex SE |
Spirax-Sarco Engineering and Nordex SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirax-Sarco Engineering and Nordex SE
The main advantage of trading using opposite Spirax-Sarco Engineering and Nordex SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirax-Sarco Engineering position performs unexpectedly, Nordex SE 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 Nordex SE will offset losses from the drop in Nordex SE's long position.| Spirax-Sarco Engineering vs. Aumann AG | Spirax-Sarco Engineering vs. Arista Power | Spirax-Sarco Engineering vs. Atlas Copco AB | Spirax-Sarco Engineering vs. American Commerce Solutions |
| Nordex SE vs. Aumann AG | Nordex SE vs. Arista Power | Nordex SE vs. Atlas Copco AB | Nordex SE 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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