Correlation Between Integrated Wind and Melhus Sparebank

Can any of the company-specific risk be diversified away by investing in both Integrated Wind and Melhus Sparebank 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 Integrated Wind and Melhus Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Integrated Wind Solutions and Melhus Sparebank, you can compare the effects of market volatilities on Integrated Wind and Melhus Sparebank 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 Integrated Wind with a short position of Melhus Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Wind and Melhus Sparebank.

Diversification Opportunities for Integrated Wind and Melhus Sparebank

-0.6

Correlation Coefficient

Integrated Wind  Melhus Sparebank

Excellent diversification

The 3 months correlation between Integrated and Melhus is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Wind Solutions and Melhus Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melhus Sparebank and Integrated Wind 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 Integrated Wind Solutions are associated (or correlated) with Melhus Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melhus Sparebank has no effect on the direction of Integrated Wind i.e., Integrated Wind and Melhus Sparebank go up and down completely randomly.

Pair Corralation between Integrated Wind and Melhus Sparebank

Assuming the 90 days trading horizon Integrated Wind Solutions is expected to under-perform the Melhus Sparebank. In addition to that, Integrated Wind is 2.09 times more volatile than Melhus Sparebank. It trades about -0.07 of its total potential returns per unit of risk. Melhus Sparebank is currently generating about 0.14 per unit of volatility. If you would invest  15,226  in Melhus Sparebank on December 29, 2024 and sell it today you would earn a total of  1,574  from holding Melhus Sparebank or generate 10.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Integrated Wind Solutions  vs.  Melhus Sparebank

Integrated Wind Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integrated Wind Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Melhus Sparebank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Melhus Sparebank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Melhus Sparebank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Integrated Wind and Melhus Sparebank

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

The idea behind Integrated Wind Solutions and Melhus Sparebank 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.