Correlation Between Vestum AB and Eolus Vind
Can any of the company-specific risk be diversified away by investing in both Vestum AB and Eolus Vind 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 Vestum AB and Eolus Vind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestum AB and Eolus Vind AB, you can compare the effects of market volatilities on Vestum AB and Eolus Vind 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 Vestum AB with a short position of Eolus Vind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestum AB and Eolus Vind.
Diversification Opportunities for Vestum AB and Eolus Vind
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vestum and Eolus is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vestum AB and Eolus Vind AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eolus Vind AB and Vestum AB 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 Vestum AB are associated (or correlated) with Eolus Vind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eolus Vind AB has no effect on the direction of Vestum AB i.e., Vestum AB and Eolus Vind go up and down completely randomly.
Pair Corralation between Vestum AB and Eolus Vind
Assuming the 90 days trading horizon Vestum AB is expected to under-perform the Eolus Vind. But the stock apears to be less risky and, when comparing its historical volatility, Vestum AB is 1.29 times less risky than Eolus Vind. The stock trades about -0.08 of its potential returns per unit of risk. The Eolus Vind AB is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 4,775 in Eolus Vind AB on August 26, 2024 and sell it today you would lose (175.00) from holding Eolus Vind AB or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestum AB vs. Eolus Vind AB
Performance |
| Timeline |
| Vestum AB |
| Eolus Vind AB |
Vestum AB and Eolus Vind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestum AB and Eolus Vind
The main advantage of trading using opposite Vestum AB and Eolus Vind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestum AB position performs unexpectedly, Eolus Vind 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 Eolus Vind will offset losses from the drop in Eolus Vind's long position.| Vestum AB vs. Lifco AB | Vestum AB vs. Sdiptech AB | Vestum AB vs. Vitec Software Group | Vestum AB vs. Addtech AB |
| Eolus Vind vs. Lifco AB | Eolus Vind vs. Sdiptech AB | Eolus Vind vs. Vitec Software Group | Eolus Vind vs. Addtech AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |