Correlation Between Vestas Wind and Impero AS
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Impero AS 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 Impero AS 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 Impero AS, you can compare the effects of market volatilities on Vestas Wind and Impero AS 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 Impero AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Impero AS.
Diversification Opportunities for Vestas Wind and Impero AS
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vestas and Impero is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Impero AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impero AS 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 Impero AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impero AS has no effect on the direction of Vestas Wind i.e., Vestas Wind and Impero AS go up and down completely randomly.
Pair Corralation between Vestas Wind and Impero AS
Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the Impero AS. But the stock apears to be less risky and, when comparing its historical volatility, Vestas Wind Systems is 2.34 times less risky than Impero AS. The stock trades about -0.04 of its potential returns per unit of risk. The Impero AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 500.00 in Impero AS on September 12, 2024 and sell it today you would earn a total of 70.00 from holding Impero AS or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. Impero AS
Performance |
| Timeline |
| Vestas Wind Systems |
| Impero AS |
Vestas Wind and Impero AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Impero AS
The main advantage of trading using opposite Vestas Wind and Impero AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Impero AS 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 Impero AS will offset losses from the drop in Impero AS's long position.| Vestas Wind vs. Genmab AS | Vestas Wind vs. Danske Bank AS | Vestas Wind vs. Ambu AS | Vestas Wind vs. FLSmidth Co |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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