Correlation Between Valmet Oyj and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both Valmet Oyj and Wartsila Oyj 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 Valmet Oyj and Wartsila Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valmet Oyj and Wartsila Oyj Abp, you can compare the effects of market volatilities on Valmet Oyj and Wartsila Oyj 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 Valmet Oyj with a short position of Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valmet Oyj and Wartsila Oyj.
Diversification Opportunities for Valmet Oyj and Wartsila Oyj
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Valmet and Wartsila is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Valmet Oyj and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp and Valmet Oyj 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 Valmet Oyj are associated (or correlated) with Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of Valmet Oyj i.e., Valmet Oyj and Wartsila Oyj go up and down completely randomly.
Pair Corralation between Valmet Oyj and Wartsila Oyj
Assuming the 90 days trading horizon Valmet Oyj is expected to generate 3.02 times less return on investment than Wartsila Oyj. In addition to that, Valmet Oyj is 1.08 times more volatile than Wartsila Oyj Abp. It trades about 0.02 of its total potential returns per unit of risk. Wartsila Oyj Abp is currently generating about 0.07 per unit of volatility. If you would invest 1,375 in Wartsila Oyj Abp on November 3, 2024 and sell it today you would earn a total of 451.00 from holding Wartsila Oyj Abp or generate 32.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valmet Oyj vs. Wartsila Oyj Abp
Performance |
| Timeline |
| Valmet Oyj |
| Wartsila Oyj Abp |
Valmet Oyj and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valmet Oyj and Wartsila Oyj
The main advantage of trading using opposite Valmet Oyj and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valmet Oyj position performs unexpectedly, Wartsila Oyj 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 Wartsila Oyj will offset losses from the drop in Wartsila Oyj's long position.| Valmet Oyj vs. Nordea Bank Abp | Valmet Oyj vs. Telefonaktiebolaget LM Ericsson | Valmet Oyj vs. Telia Company AB | Valmet Oyj vs. Fortum Oyj |
| Wartsila Oyj vs. Sampo Oyj A | Wartsila Oyj vs. Fortum Oyj | Wartsila Oyj vs. UPM Kymmene Oyj | Wartsila Oyj vs. Nordea Bank Abp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |