Correlation Between Vestas Wind and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Nel ASA 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 Nel ASA 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 Nel ASA, you can compare the effects of market volatilities on Vestas Wind and Nel ASA 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 Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Nel ASA.
Diversification Opportunities for Vestas Wind and Nel ASA
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vestas and Nel is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA 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 Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Vestas Wind i.e., Vestas Wind and Nel ASA go up and down completely randomly.
Pair Corralation between Vestas Wind and Nel ASA
Assuming the 90 days trading horizon Vestas Wind Systems is expected to generate 0.95 times more return on investment than Nel ASA. However, Vestas Wind Systems is 1.05 times less risky than Nel ASA. It trades about -0.24 of its potential returns per unit of risk. Nel ASA is currently generating about -0.35 per unit of risk. If you would invest 1,742 in Vestas Wind Systems on August 29, 2024 and sell it today you would lose (380.00) from holding Vestas Wind Systems or give up 21.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Vestas Wind Systems vs. Nel ASA
Performance |
Timeline |
Vestas Wind Systems |
Nel ASA |
Vestas Wind and Nel ASA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vestas Wind and Nel ASA
The main advantage of trading using opposite Vestas Wind and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.Vestas Wind vs. CECO ENVIRONMENTAL | Vestas Wind vs. ALGOMA STEEL GROUP | Vestas Wind vs. COSMOSTEEL HLDGS | Vestas Wind vs. DAIRY FARM INTL |
Nel ASA vs. Superior Plus Corp | Nel ASA vs. NMI Holdings | Nel ASA vs. Origin Agritech | Nel ASA vs. SIVERS SEMICONDUCTORS AB |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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