Correlation Between EIDESVIK OFFSHORE and URBAN OUTFITTERS

Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and URBAN OUTFITTERS 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 EIDESVIK OFFSHORE and URBAN OUTFITTERS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EIDESVIK OFFSHORE NK and URBAN OUTFITTERS, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and URBAN OUTFITTERS 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 EIDESVIK OFFSHORE with a short position of URBAN OUTFITTERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and URBAN OUTFITTERS.

Diversification Opportunities for EIDESVIK OFFSHORE and URBAN OUTFITTERS

-0.56

Correlation Coefficient

EIDESVIK OFFSHORE  URBAN OUTFITTERS

Excellent diversification

The 3 months correlation between EIDESVIK and URBAN is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and URBAN OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URBAN OUTFITTERS and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK are associated (or correlated) with URBAN OUTFITTERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URBAN OUTFITTERS has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and URBAN OUTFITTERS go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and URBAN OUTFITTERS

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to under-perform the URBAN OUTFITTERS. But the stock apears to be less risky and, when comparing its historical volatility, EIDESVIK OFFSHORE NK is 1.38 times less risky than URBAN OUTFITTERS. The stock trades about -0.08 of its potential returns per unit of risk. The URBAN OUTFITTERS is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,240  in URBAN OUTFITTERS on September 13, 2024 and sell it today you would earn a total of  1,660  from holding URBAN OUTFITTERS or generate 51.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

EIDESVIK OFFSHORE NK  vs.  URBAN OUTFITTERS

EIDESVIK OFFSHORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EIDESVIK OFFSHORE NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

URBAN OUTFITTERS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in URBAN OUTFITTERS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, URBAN OUTFITTERS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EIDESVIK OFFSHORE and URBAN OUTFITTERS

The main advantage of trading using opposite EIDESVIK OFFSHORE and URBAN OUTFITTERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE position performs unexpectedly, URBAN OUTFITTERS 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 URBAN OUTFITTERS will offset losses from the drop in URBAN OUTFITTERS's long position.

The idea behind EIDESVIK OFFSHORE NK and URBAN OUTFITTERS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.