Correlation Between Vestas Wind and Brewbilt Manufacturing
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Brewbilt Manufacturing 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 Brewbilt Manufacturing 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 Brewbilt Manufacturing, you can compare the effects of market volatilities on Vestas Wind and Brewbilt Manufacturing 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 Brewbilt Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Brewbilt Manufacturing.
Diversification Opportunities for Vestas Wind and Brewbilt Manufacturing
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vestas and Brewbilt is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Brewbilt Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brewbilt Manufacturing 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 Brewbilt Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brewbilt Manufacturing has no effect on the direction of Vestas Wind i.e., Vestas Wind and Brewbilt Manufacturing go up and down completely randomly.
Pair Corralation between Vestas Wind and Brewbilt Manufacturing
Assuming the 90 days horizon Vestas Wind Systems is expected to under-perform the Brewbilt Manufacturing. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vestas Wind Systems is 23.04 times less risky than Brewbilt Manufacturing. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Brewbilt Manufacturing is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Brewbilt Manufacturing on August 29, 2024 and sell it today you would lose (9.00) from holding Brewbilt Manufacturing or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.16% |
| Values | Daily Returns |
Vestas Wind Systems vs. Brewbilt Manufacturing
Performance |
| Timeline |
| Vestas Wind Systems |
| Brewbilt Manufacturing |
Vestas Wind and Brewbilt Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Brewbilt Manufacturing
The main advantage of trading using opposite Vestas Wind and Brewbilt Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Brewbilt Manufacturing 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 Brewbilt Manufacturing will offset losses from the drop in Brewbilt Manufacturing's long position.| Vestas Wind vs. Parker Hannifin | Vestas Wind vs. Eaton PLC | Vestas Wind vs. Dover | Vestas Wind vs. Illinois Tool Works |
| Brewbilt Manufacturing vs. Aumann AG | Brewbilt Manufacturing vs. Amaero International | Brewbilt Manufacturing vs. Arista Power | Brewbilt Manufacturing vs. Alfa Laval 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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