Correlation Between Vestas Wind and Nordex SE
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and Nordex SE 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 Nordex SE 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 Nordex SE, you can compare the effects of market volatilities on Vestas Wind and Nordex SE 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 Nordex SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Nordex SE.
Diversification Opportunities for Vestas Wind and Nordex SE
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vestas and Nordex is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE 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 Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of Vestas Wind i.e., Vestas Wind and Nordex SE go up and down completely randomly.
Pair Corralation between Vestas Wind and Nordex SE
If you would invest 738.00 in Nordex SE on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Nordex SE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vestas Wind Systems vs. Nordex SE
Performance |
| Timeline |
| Vestas Wind Systems |
| Nordex SE |
Vestas Wind and Nordex SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Nordex SE
The main advantage of trading using opposite Vestas Wind and Nordex SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, Nordex SE 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 Nordex SE will offset losses from the drop in Nordex SE's long position.| Vestas Wind vs. KONE Oyj | Vestas Wind vs. Spirax Sarco Engineering PLC | Vestas Wind vs. Atlas Copco ADR | Vestas Wind vs. IDEX Corporation |
| Nordex SE vs. Shanghai Electric Group | Nordex SE vs. Schneider Electric SA | Nordex SE vs. Xinjiang Goldwind Science | Nordex SE vs. Nordex SE |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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