Correlation Between Vestas Wind and Alm Brand
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Alm Brand 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 Alm Brand 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 Alm Brand, you can compare the effects of market volatilities on Vestas Wind and Alm Brand 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 Alm Brand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Alm Brand.
Diversification Opportunities for Vestas Wind and Alm Brand
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vestas and Alm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Alm Brand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alm Brand 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 Alm Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alm Brand has no effect on the direction of Vestas Wind i.e., Vestas Wind and Alm Brand go up and down completely randomly.
Pair Corralation between Vestas Wind and Alm Brand
Assuming the 90 days trading horizon Vestas Wind Systems is expected to generate 3.17 times more return on investment than Alm Brand. However, Vestas Wind is 3.17 times more volatile than Alm Brand. It trades about 0.09 of its potential returns per unit of risk. Alm Brand is currently generating about 0.2 per unit of risk. If you would invest 9,496 in Vestas Wind Systems on November 27, 2024 and sell it today you would earn a total of 404.00 from holding Vestas Wind Systems or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. Alm Brand
Performance |
| Timeline |
| Vestas Wind Systems |
| Alm Brand |
Vestas Wind and Alm Brand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Alm Brand
The main advantage of trading using opposite Vestas Wind and Alm Brand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Alm Brand 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 Alm Brand will offset losses from the drop in Alm Brand's long position.| Vestas Wind vs. Orsted AS | Vestas Wind vs. Danske Bank AS | Vestas Wind vs. Bavarian Nordic | Vestas Wind 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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