Correlation Between Var Energi and Yara International
Can any of the company-specific risk be diversified away by investing in both Var Energi and Yara International 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 Yara International 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 Yara International ASA, you can compare the effects of market volatilities on Var Energi and Yara International 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 Yara International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Var Energi and Yara International.
Diversification Opportunities for Var Energi and Yara International
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Var and Yara is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International 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 Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of Var Energi i.e., Var Energi and Yara International go up and down completely randomly.
Pair Corralation between Var Energi and Yara International
Assuming the 90 days trading horizon Var Energi ASA is expected to generate 1.3 times more return on investment than Yara International. However, Var Energi is 1.3 times more volatile than Yara International ASA. It trades about 0.04 of its potential returns per unit of risk. Yara International ASA is currently generating about -0.03 per unit of risk. If you would invest 3,167 in Var Energi ASA on September 1, 2024 and sell it today you would earn a total of 459.00 from holding Var Energi ASA or generate 14.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Var Energi ASA vs. Yara International ASA
Performance |
| Timeline |
| Var Energi ASA |
| Yara International ASA |
Var Energi and Yara International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Var Energi and Yara International
The main advantage of trading using opposite Var Energi and Yara International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Var Energi position performs unexpectedly, Yara International 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 Yara International will offset losses from the drop in Yara International's long position.| Var Energi vs. Aker BP ASA | Var Energi vs. Belships | Var Energi vs. MPC Container Ships | Var Energi vs. BW Energy |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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