Correlation Between Vestas Wind and Orsted AS
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Orsted 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 Orsted 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 Orsted AS, you can compare the effects of market volatilities on Vestas Wind and Orsted 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 Orsted AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Orsted AS.
Diversification Opportunities for Vestas Wind and Orsted AS
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vestas and Orsted is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted 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 Orsted AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS has no effect on the direction of Vestas Wind i.e., Vestas Wind and Orsted AS go up and down completely randomly.
Pair Corralation between Vestas Wind and Orsted AS
Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the Orsted AS. In addition to that, Vestas Wind is 1.27 times more volatile than Orsted AS. It trades about -0.22 of its total potential returns per unit of risk. Orsted AS is currently generating about -0.11 per unit of volatility. If you would invest 43,410 in Orsted AS on August 28, 2024 and sell it today you would lose (4,050) from holding Orsted AS or give up 9.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. Orsted AS
Performance |
| Timeline |
| Vestas Wind Systems |
| Orsted AS |
Vestas Wind and Orsted AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Orsted AS
The main advantage of trading using opposite Vestas Wind and Orsted AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Orsted 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 Orsted AS will offset losses from the drop in Orsted AS'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 |
| Orsted AS vs. Carnegie Wealth Management | Orsted AS vs. Fynske Bank AS | Orsted AS vs. Scandinavian Tobacco Group | Orsted AS vs. Hvidbjerg Bank |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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