Correlation Between Melhus Sparebank and Stolt Nielsen
Can any of the company-specific risk be diversified away by investing in both Melhus Sparebank and Stolt Nielsen 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 Melhus Sparebank and Stolt Nielsen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melhus Sparebank and Stolt Nielsen Limited, you can compare the effects of market volatilities on Melhus Sparebank and Stolt Nielsen 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 Melhus Sparebank with a short position of Stolt Nielsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melhus Sparebank and Stolt Nielsen.
Diversification Opportunities for Melhus Sparebank and Stolt Nielsen
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melhus and Stolt is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Melhus Sparebank and Stolt Nielsen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stolt Nielsen Limited and Melhus Sparebank 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 Melhus Sparebank are associated (or correlated) with Stolt Nielsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stolt Nielsen Limited has no effect on the direction of Melhus Sparebank i.e., Melhus Sparebank and Stolt Nielsen go up and down completely randomly.
Pair Corralation between Melhus Sparebank and Stolt Nielsen
Assuming the 90 days trading horizon Melhus Sparebank is expected to generate 1.32 times less return on investment than Stolt Nielsen. But when comparing it to its historical volatility, Melhus Sparebank is 1.88 times less risky than Stolt Nielsen. It trades about 0.04 of its potential returns per unit of risk. Stolt Nielsen Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 23,686 in Stolt Nielsen Limited on September 14, 2024 and sell it today you would earn a total of 5,164 from holding Stolt Nielsen Limited or generate 21.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Melhus Sparebank vs. Stolt Nielsen Limited
Performance |
Timeline |
Melhus Sparebank |
Stolt Nielsen Limited |
Melhus Sparebank and Stolt Nielsen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Melhus Sparebank and Stolt Nielsen
The main advantage of trading using opposite Melhus Sparebank and Stolt Nielsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melhus Sparebank position performs unexpectedly, Stolt Nielsen 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 Stolt Nielsen will offset losses from the drop in Stolt Nielsen's long position.Melhus Sparebank vs. Sparebank 1 Nord Norge | ||
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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