Correlation Between Vestas Wind and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Atlas Copco 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 Vestas Wind and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestas Wind Systems and Atlas Copco AB, you can compare the effects of market volatilities on Vestas Wind and Atlas Copco 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 Vestas Wind with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Atlas Copco.
Diversification Opportunities for Vestas Wind and Atlas Copco
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vestas and Atlas is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB and Vestas Wind 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 Vestas Wind Systems are associated (or correlated) with Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of Vestas Wind i.e., Vestas Wind and Atlas Copco go up and down completely randomly.
Pair Corralation between Vestas Wind and Atlas Copco
Assuming the 90 days horizon Vestas Wind Systems is expected to under-perform the Atlas Copco. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vestas Wind Systems is 1.04 times less risky than Atlas Copco. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Atlas Copco AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,457 in Atlas Copco AB on September 1, 2024 and sell it today you would earn a total of 141.00 from holding Atlas Copco AB or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. Atlas Copco AB
Performance |
| Timeline |
| Vestas Wind Systems |
| Atlas Copco AB |
Vestas Wind and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Atlas Copco
The main advantage of trading using opposite Vestas Wind and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| Vestas Wind vs. Kone Oyj ADR | Vestas Wind vs. Schneider Electric SE | Vestas Wind vs. Schneider Electric SA | Vestas Wind vs. Fanuc |
| Atlas Copco vs. GE Aerospace | Atlas Copco vs. Eaton PLC | Atlas Copco vs. Siemens AG Class | Atlas Copco vs. Parker Hannifin |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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