Correlation Between Yokogawa Electric and Vestas Wind
Can any of the company-specific risk be diversified away by investing in both Yokogawa Electric and Vestas Wind 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 Yokogawa Electric and Vestas Wind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yokogawa Electric Corp and Vestas Wind Systems, you can compare the effects of market volatilities on Yokogawa Electric and Vestas Wind 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 Yokogawa Electric with a short position of Vestas Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokogawa Electric and Vestas Wind.
Diversification Opportunities for Yokogawa Electric and Vestas Wind
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yokogawa and Vestas is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Yokogawa Electric Corp and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems and Yokogawa Electric 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 Yokogawa Electric Corp are associated (or correlated) with Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of Yokogawa Electric i.e., Yokogawa Electric and Vestas Wind go up and down completely randomly.
Pair Corralation between Yokogawa Electric and Vestas Wind
Assuming the 90 days horizon Yokogawa Electric Corp is expected to generate 0.97 times more return on investment than Vestas Wind. However, Yokogawa Electric Corp is 1.03 times less risky than Vestas Wind. It trades about 0.02 of its potential returns per unit of risk. Vestas Wind Systems is currently generating about -0.05 per unit of risk. If you would invest 4,086 in Yokogawa Electric Corp on August 26, 2024 and sell it today you would earn a total of 296.00 from holding Yokogawa Electric Corp or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yokogawa Electric Corp vs. Vestas Wind Systems
Performance |
| Timeline |
| Yokogawa Electric Corp |
| Vestas Wind Systems |
Yokogawa Electric and Vestas Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yokogawa Electric and Vestas Wind
The main advantage of trading using opposite Yokogawa Electric and Vestas Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokogawa Electric position performs unexpectedly, Vestas Wind 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 Vestas Wind will offset losses from the drop in Vestas Wind's long position.| Yokogawa Electric vs. Aumann AG | Yokogawa Electric vs. Arista Power | Yokogawa Electric vs. Atlas Copco AB | Yokogawa Electric vs. American Commerce Solutions |
| Vestas Wind vs. KONE Oyj | Vestas Wind vs. Spirax Sarco Engineering PLC | Vestas Wind vs. Atlas Copco ADR | Vestas Wind vs. IDEX Corporation |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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