Correlation Between Yara International and E I
Can any of the company-specific risk be diversified away by investing in both Yara International and E I 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 E I 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 E I du, you can compare the effects of market volatilities on Yara International and E I 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 E I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yara International and E I.
Diversification Opportunities for Yara International and E I
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yara and CTA-PB is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Yara International ASA and E I du in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E I du 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 E I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E I du has no effect on the direction of Yara International i.e., Yara International and E I go up and down completely randomly.
Pair Corralation between Yara International and E I
Assuming the 90 days horizon Yara International ASA is expected to under-perform the E I. In addition to that, Yara International is 1.57 times more volatile than E I du. It trades about -0.21 of its total potential returns per unit of risk. E I du is currently generating about -0.18 per unit of volatility. If you would invest 7,646 in E I du on August 30, 2024 and sell it today you would lose (344.00) from holding E I du or give up 4.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yara International ASA vs. E I du
Performance |
| Timeline |
| Yara International ASA |
| E I du |
Yara International and E I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yara International and E I
The main advantage of trading using opposite Yara International and E I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yara International position performs unexpectedly, E I 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 E I will offset losses from the drop in E I's long position.| Yara International vs. KS AG DRC | Yara International vs. ICL Israel Chemicals | Yara International vs. CF Industries Holdings | Yara International vs. The Mosaic |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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