Correlation Between Vestas Wind and Groenlandsbanken
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Groenlandsbanken 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 Groenlandsbanken 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 Groenlandsbanken AS, you can compare the effects of market volatilities on Vestas Wind and Groenlandsbanken 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 Groenlandsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Groenlandsbanken.
Diversification Opportunities for Vestas Wind and Groenlandsbanken
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vestas and Groenlandsbanken is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Groenlandsbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groenlandsbanken 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 Groenlandsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groenlandsbanken has no effect on the direction of Vestas Wind i.e., Vestas Wind and Groenlandsbanken go up and down completely randomly.
Pair Corralation between Vestas Wind and Groenlandsbanken
Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the Groenlandsbanken. In addition to that, Vestas Wind is 1.26 times more volatile than Groenlandsbanken AS. It trades about -0.04 of its total potential returns per unit of risk. Groenlandsbanken AS is currently generating about 0.11 per unit of volatility. If you would invest 70,000 in Groenlandsbanken AS on November 1, 2024 and sell it today you would earn a total of 3,500 from holding Groenlandsbanken AS or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vestas Wind Systems vs. Groenlandsbanken AS
Performance |
| Timeline |
| Vestas Wind Systems |
| Groenlandsbanken |
Vestas Wind and Groenlandsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Groenlandsbanken
The main advantage of trading using opposite Vestas Wind and Groenlandsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Groenlandsbanken 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 Groenlandsbanken will offset losses from the drop in Groenlandsbanken'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 |
| Groenlandsbanken vs. Skjern Bank AS | Groenlandsbanken vs. Lollands Bank | Groenlandsbanken vs. Ringkjoebing Landbobank AS | Groenlandsbanken vs. Kreditbanken 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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