Correlation Between Vestas Wind and Skjern Bank
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Skjern 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 Skjern 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 Skjern Bank AS, you can compare the effects of market volatilities on Vestas Wind and Skjern 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 Skjern Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Skjern Bank.
Diversification Opportunities for Vestas Wind and Skjern Bank
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vestas and Skjern is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Skjern Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skjern 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 Skjern Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skjern Bank AS has no effect on the direction of Vestas Wind i.e., Vestas Wind and Skjern Bank go up and down completely randomly.
Pair Corralation between Vestas Wind and Skjern Bank
Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the Skjern Bank. In addition to that, Vestas Wind is 3.71 times more volatile than Skjern Bank AS. It trades about -0.25 of its total potential returns per unit of risk. Skjern Bank AS is currently generating about -0.3 per unit of volatility. If you would invest 16,850 in Skjern Bank AS on August 29, 2024 and sell it today you would lose (1,300) from holding Skjern Bank AS or give up 7.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vestas Wind Systems vs. Skjern Bank AS
Performance |
| Timeline |
| Vestas Wind Systems |
| Skjern Bank AS |
Vestas Wind and Skjern Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Skjern Bank
The main advantage of trading using opposite Vestas Wind and Skjern Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Skjern 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 Skjern Bank will offset losses from the drop in Skjern 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 |
| Skjern Bank vs. Sydbank AS | Skjern Bank vs. Jyske Bank AS | Skjern Bank vs. Alm Brand | Skjern Bank vs. Nordea Bank Abp |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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