Correlation Between Vow ASA and Bavarian Nordic
Can any of the company-specific risk be diversified away by investing in both Vow ASA and Bavarian Nordic 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 Vow ASA and Bavarian Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vow ASA and Bavarian Nordic, you can compare the effects of market volatilities on Vow ASA and Bavarian Nordic 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 Vow ASA with a short position of Bavarian Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and Bavarian Nordic.
Diversification Opportunities for Vow ASA and Bavarian Nordic
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vow and Bavarian is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and Bavarian Nordic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bavarian Nordic and Vow ASA 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 Vow ASA are associated (or correlated) with Bavarian Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bavarian Nordic has no effect on the direction of Vow ASA i.e., Vow ASA and Bavarian Nordic go up and down completely randomly.
Pair Corralation between Vow ASA and Bavarian Nordic
Assuming the 90 days trading horizon Vow ASA is expected to under-perform the Bavarian Nordic. In addition to that, Vow ASA is 1.73 times more volatile than Bavarian Nordic. It trades about -0.26 of its total potential returns per unit of risk. Bavarian Nordic is currently generating about -0.08 per unit of volatility. If you would invest 21,470 in Bavarian Nordic on September 1, 2024 and sell it today you would lose (2,130) from holding Bavarian Nordic or give up 9.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vow ASA vs. Bavarian Nordic
Performance |
| Timeline |
| Vow ASA |
| Bavarian Nordic |
Vow ASA and Bavarian Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vow ASA and Bavarian Nordic
The main advantage of trading using opposite Vow ASA and Bavarian Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vow ASA position performs unexpectedly, Bavarian Nordic 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 Bavarian Nordic will offset losses from the drop in Bavarian Nordic's long position.| Vow ASA vs. Hexagon Composites ASA | Vow ASA vs. Vow Green Metals | Vow ASA vs. REC Silicon ASA | Vow ASA vs. Aker Carbon Capture |
| Bavarian Nordic vs. Ambu AS | Bavarian Nordic vs. Danske Bank AS | Bavarian Nordic vs. Genmab AS | Bavarian Nordic vs. DSV Panalpina AS |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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