Correlation Between Vestas Wind and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Rockwell Automation 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 Rockwell Automation 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 Rockwell Automation, you can compare the effects of market volatilities on Vestas Wind and Rockwell Automation 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 Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Rockwell Automation.
Diversification Opportunities for Vestas Wind and Rockwell Automation
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vestas and Rockwell is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Vestas Wind i.e., Vestas Wind and Rockwell Automation go up and down completely randomly.
Pair Corralation between Vestas Wind and Rockwell Automation
Assuming the 90 days horizon Vestas Wind Systems is expected to under-perform the Rockwell Automation. In addition to that, Vestas Wind is 1.48 times more volatile than Rockwell Automation. It trades about -0.3 of its total potential returns per unit of risk. Rockwell Automation is currently generating about 0.15 per unit of volatility. If you would invest 26,645 in Rockwell Automation on August 25, 2024 and sell it today you would earn a total of 2,441 from holding Rockwell Automation or generate 9.16% 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. Rockwell Automation
Performance |
| Timeline |
| Vestas Wind Systems |
| Rockwell Automation |
Vestas Wind and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Rockwell Automation
The main advantage of trading using opposite Vestas Wind and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.| Vestas Wind vs. Aumann AG | Vestas Wind vs. Arista Power | Vestas Wind vs. Atlas Copco AB | Vestas Wind vs. American Commerce Solutions |
| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton PLC |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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