Correlation Between Vestas Wind and Generac Holdings
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Generac Holdings 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 Generac Holdings 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 Generac Holdings, you can compare the effects of market volatilities on Vestas Wind and Generac Holdings 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 Generac Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Generac Holdings.
Diversification Opportunities for Vestas Wind and Generac Holdings
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vestas and Generac is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Generac Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generac Holdings 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 Generac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generac Holdings has no effect on the direction of Vestas Wind i.e., Vestas Wind and Generac Holdings go up and down completely randomly.
Pair Corralation between Vestas Wind and Generac Holdings
Assuming the 90 days horizon Vestas Wind Systems is expected to under-perform the Generac Holdings. In addition to that, Vestas Wind is 2.11 times more volatile than Generac Holdings. It trades about -0.3 of its total potential returns per unit of risk. Generac Holdings is currently generating about 0.34 per unit of volatility. If you would invest 16,565 in Generac Holdings on August 29, 2024 and sell it today you would earn a total of 2,661 from holding Generac Holdings or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. Generac Holdings
Performance |
| Timeline |
| Vestas Wind Systems |
| Generac Holdings |
Vestas Wind and Generac Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Generac Holdings
The main advantage of trading using opposite Vestas Wind and Generac Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Generac Holdings 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 Generac Holdings will offset losses from the drop in Generac Holdings' long position.| Vestas Wind vs. Parker Hannifin | Vestas Wind vs. Eaton PLC | Vestas Wind vs. Dover | Vestas Wind vs. Illinois Tool Works |
| Generac Holdings vs. Emerson Electric | Generac Holdings vs. Eaton PLC | Generac Holdings vs. Parker Hannifin | Generac Holdings vs. Illinois Tool Works |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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