Correlation Between Western Bulk and Aurskog Sparebank
Can any of the company-specific risk be diversified away by investing in both Western Bulk and Aurskog Sparebank 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 Western Bulk and Aurskog Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Bulk Chartering and Aurskog Sparebank, you can compare the effects of market volatilities on Western Bulk and Aurskog Sparebank 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 Western Bulk with a short position of Aurskog Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Bulk and Aurskog Sparebank.
Diversification Opportunities for Western Bulk and Aurskog Sparebank
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Aurskog is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Western Bulk Chartering and Aurskog Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurskog Sparebank and Western Bulk 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 Western Bulk Chartering are associated (or correlated) with Aurskog Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurskog Sparebank has no effect on the direction of Western Bulk i.e., Western Bulk and Aurskog Sparebank go up and down completely randomly.
Pair Corralation between Western Bulk and Aurskog Sparebank
Assuming the 90 days trading horizon Western Bulk Chartering is expected to under-perform the Aurskog Sparebank. In addition to that, Western Bulk is 1.99 times more volatile than Aurskog Sparebank. It trades about -0.2 of its total potential returns per unit of risk. Aurskog Sparebank is currently generating about 0.06 per unit of volatility. If you would invest 23,300 in Aurskog Sparebank on August 29, 2024 and sell it today you would earn a total of 295.00 from holding Aurskog Sparebank or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Bulk Chartering vs. Aurskog Sparebank
Performance |
| Timeline |
| Western Bulk Chartering |
| Aurskog Sparebank |
Western Bulk and Aurskog Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Bulk and Aurskog Sparebank
The main advantage of trading using opposite Western Bulk and Aurskog Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Bulk position performs unexpectedly, Aurskog Sparebank 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 Aurskog Sparebank will offset losses from the drop in Aurskog Sparebank's long position.| Western Bulk vs. Bien Sparebank ASA | Western Bulk vs. 5Th Planet Games | Western Bulk vs. Helgeland Sparebank | Western Bulk vs. Skue Sparebank |
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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