Correlation Between Vestas Wind and Nordfyns Bank
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Nordfyns Bank 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 Nordfyns Bank 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 Nordfyns Bank AS, you can compare the effects of market volatilities on Vestas Wind and Nordfyns Bank 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 Nordfyns Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Nordfyns Bank.
Diversification Opportunities for Vestas Wind and Nordfyns Bank
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vestas and Nordfyns is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Nordfyns Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordfyns Bank 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 Nordfyns Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordfyns Bank AS has no effect on the direction of Vestas Wind i.e., Vestas Wind and Nordfyns Bank go up and down completely randomly.
Pair Corralation between Vestas Wind and Nordfyns Bank
Assuming the 90 days trading horizon Vestas Wind Systems is expected to generate 3.99 times more return on investment than Nordfyns Bank. However, Vestas Wind is 3.99 times more volatile than Nordfyns Bank AS. It trades about 0.14 of its potential returns per unit of risk. Nordfyns Bank AS is currently generating about 0.44 per unit of risk. If you would invest 9,496 in Vestas Wind Systems on November 28, 2024 and sell it today you would earn a total of 744.00 from holding Vestas Wind Systems or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vestas Wind Systems vs. Nordfyns Bank AS
Performance |
| Timeline |
| Vestas Wind Systems |
| Nordfyns Bank AS |
Vestas Wind and Nordfyns Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Nordfyns Bank
The main advantage of trading using opposite Vestas Wind and Nordfyns Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Nordfyns Bank 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 Nordfyns Bank will offset losses from the drop in Nordfyns Bank'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 |
| Nordfyns Bank vs. Skjern Bank AS | Nordfyns Bank vs. Lollands Bank | Nordfyns Bank vs. Djurslands Bank | Nordfyns Bank vs. Moens Bank 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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