Correlation Between Integrated Wind and Romerike Sparebank

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

Diversification Opportunities for Integrated Wind and Romerike Sparebank

-0.13

Correlation Coefficient

Integrated Wind  Romerike Sparebank

Good diversification

The 3 months correlation between Integrated and Romerike is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Wind Solutions and Romerike Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romerike 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 Romerike Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romerike Sparebank has no effect on the direction of Integrated Wind i.e., Integrated Wind and Romerike Sparebank go up and down completely randomly.

Pair Corralation between Integrated Wind and Romerike Sparebank

Assuming the 90 days trading horizon Integrated Wind Solutions is expected to under-perform the Romerike Sparebank. In addition to that, Integrated Wind is 2.21 times more volatile than Romerike Sparebank. It trades about -0.02 of its total potential returns per unit of risk. Romerike Sparebank is currently generating about 0.02 per unit of volatility. If you would invest  12,498  in Romerike Sparebank on August 31, 2024 and sell it today you would earn a total of  82.00  from holding Romerike Sparebank or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Integrated Wind Solutions  vs.  Romerike Sparebank

Integrated Wind Solutions

Risk-Adjusted Performance

0 of 100

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 quite persistent basic indicators, Integrated Wind is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Romerike Sparebank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Romerike Sparebank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Romerike Sparebank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Integrated Wind and Romerike Sparebank

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

The idea behind Integrated Wind Solutions and Romerike 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.