Correlation Between YIT Oyj and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both YIT Oyj and Wartsila Oyj 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 YIT Oyj and Wartsila Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YIT Oyj and Wartsila Oyj Abp, you can compare the effects of market volatilities on YIT Oyj and Wartsila Oyj 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 YIT Oyj with a short position of Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of YIT Oyj and Wartsila Oyj.
Diversification Opportunities for YIT Oyj and Wartsila Oyj
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between YIT and Wartsila is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding YIT Oyj and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp and YIT Oyj 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 YIT Oyj are associated (or correlated) with Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of YIT Oyj i.e., YIT Oyj and Wartsila Oyj go up and down completely randomly.
Pair Corralation between YIT Oyj and Wartsila Oyj
Assuming the 90 days trading horizon YIT Oyj is expected to generate 0.97 times more return on investment than Wartsila Oyj. However, YIT Oyj is 1.03 times less risky than Wartsila Oyj. It trades about 0.02 of its potential returns per unit of risk. Wartsila Oyj Abp is currently generating about -0.22 per unit of risk. If you would invest 237.00 in YIT Oyj on August 29, 2024 and sell it today you would earn a total of 1.00 from holding YIT Oyj or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
YIT Oyj vs. Wartsila Oyj Abp
Performance |
| Timeline |
| YIT Oyj |
| Wartsila Oyj Abp |
YIT Oyj and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YIT Oyj and Wartsila Oyj
The main advantage of trading using opposite YIT Oyj and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YIT Oyj position performs unexpectedly, Wartsila Oyj 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 Wartsila Oyj will offset losses from the drop in Wartsila Oyj's long position.| YIT Oyj vs. Aktia Bank Abp | YIT Oyj vs. Alandsbanken Abp B | YIT Oyj vs. Alandsbanken Abp A | YIT Oyj vs. Sampo Oyj A |
| Wartsila Oyj vs. Aktia Bank Abp | Wartsila Oyj vs. Alandsbanken Abp B | Wartsila Oyj vs. Alandsbanken Abp A | Wartsila Oyj vs. Sampo Oyj A |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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