Correlation Between Yara International and Wilh Wilhelmsen
Can any of the company-specific risk be diversified away by investing in both Yara International and Wilh Wilhelmsen 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 Yara International and Wilh Wilhelmsen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yara International ASA and Wilh Wilhelmsen Holding, you can compare the effects of market volatilities on Yara International and Wilh Wilhelmsen 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 Yara International with a short position of Wilh Wilhelmsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yara International and Wilh Wilhelmsen.
Diversification Opportunities for Yara International and Wilh Wilhelmsen
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yara and Wilh is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Yara International ASA and Wilh Wilhelmsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilh Wilhelmsen Holding and Yara International 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 Yara International ASA are associated (or correlated) with Wilh Wilhelmsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilh Wilhelmsen Holding has no effect on the direction of Yara International i.e., Yara International and Wilh Wilhelmsen go up and down completely randomly.
Pair Corralation between Yara International and Wilh Wilhelmsen
Assuming the 90 days trading horizon Yara International ASA is expected to under-perform the Wilh Wilhelmsen. But the stock apears to be less risky and, when comparing its historical volatility, Yara International ASA is 1.4 times less risky than Wilh Wilhelmsen. The stock trades about -0.18 of its potential returns per unit of risk. The Wilh Wilhelmsen Holding is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 45,169 in Wilh Wilhelmsen Holding on August 24, 2024 and sell it today you would lose (1,869) from holding Wilh Wilhelmsen Holding or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yara International ASA vs. Wilh Wilhelmsen Holding
Performance |
| Timeline |
| Yara International ASA |
| Wilh Wilhelmsen Holding |
Yara International and Wilh Wilhelmsen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yara International and Wilh Wilhelmsen
The main advantage of trading using opposite Yara International and Wilh Wilhelmsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yara International position performs unexpectedly, Wilh Wilhelmsen 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 Wilh Wilhelmsen will offset losses from the drop in Wilh Wilhelmsen's long position.| Yara International vs. Telenor ASA | Yara International vs. Orkla ASA | Yara International vs. DnB ASA | Yara International vs. Storebrand ASA |
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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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