Correlation Between Var Energi and DnB ASA
Can any of the company-specific risk be diversified away by investing in both Var Energi and DnB ASA 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 Var Energi and DnB ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Var Energi ASA and DnB ASA, you can compare the effects of market volatilities on Var Energi and DnB ASA 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 Var Energi with a short position of DnB ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Var Energi and DnB ASA.
Diversification Opportunities for Var Energi and DnB ASA
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Var and DnB is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and DnB ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DnB ASA and Var Energi 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 Var Energi ASA are associated (or correlated) with DnB ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DnB ASA has no effect on the direction of Var Energi i.e., Var Energi and DnB ASA go up and down completely randomly.
Pair Corralation between Var Energi and DnB ASA
Assuming the 90 days trading horizon Var Energi ASA is expected to under-perform the DnB ASA. In addition to that, Var Energi is 2.05 times more volatile than DnB ASA. It trades about -0.05 of its total potential returns per unit of risk. DnB ASA is currently generating about 0.25 per unit of volatility. If you would invest 24,150 in DnB ASA on November 27, 2024 and sell it today you would earn a total of 1,280 from holding DnB ASA or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Var Energi ASA vs. DnB ASA
Performance |
| Timeline |
| Var Energi ASA |
| DnB ASA |
Var Energi and DnB ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Var Energi and DnB ASA
The main advantage of trading using opposite Var Energi and DnB ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Var Energi position performs unexpectedly, DnB ASA 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 DnB ASA will offset losses from the drop in DnB ASA's long position.| Var Energi vs. Aker BP ASA | Var Energi vs. Belships | Var Energi vs. MPC Container Ships | Var Energi vs. BW Energy |
| DnB ASA vs. Telenor ASA | DnB ASA vs. Storebrand ASA | DnB ASA vs. Orkla ASA | DnB ASA vs. Gjensidige Forsikring ASA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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