Correlation Between EIDESVIK OFFSHORE and Walt Disney

Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE and Walt Disney 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 Walt Disney 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 The Walt Disney, you can compare the effects of market volatilities on EIDESVIK OFFSHORE and Walt Disney 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 Walt Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and Walt Disney.

Diversification Opportunities for EIDESVIK OFFSHORE and Walt Disney

-0.69

Correlation Coefficient

EIDESVIK OFFSHORE  Walt Disney

Excellent diversification

The 3 months correlation between EIDESVIK and Walt is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Walt Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Walt Disney go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and Walt Disney

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to under-perform the Walt Disney. In addition to that, EIDESVIK OFFSHORE is 1.6 times more volatile than The Walt Disney. It trades about -0.06 of its total potential returns per unit of risk. The Walt Disney is currently generating about 0.33 per unit of volatility. If you would invest  8,063  in The Walt Disney on September 12, 2024 and sell it today you would earn a total of  2,823  from holding The Walt Disney or generate 35.01% return on investment over 90 days.

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

EIDESVIK OFFSHORE NK  vs.  The Walt Disney

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.

Walt Disney

Risk-Adjusted Performance

25 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Walt Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EIDESVIK OFFSHORE and Walt Disney

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

The idea behind EIDESVIK OFFSHORE NK and The Walt Disney 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.