Correlation Between Vestas Wind and Formuepleje Limittellus

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

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

Diversification Opportunities for Vestas Wind and Formuepleje Limittellus

-0.79

Correlation Coefficient

Vestas Wind  Formuepleje Limittellus

Pay attention - limited upside

The 3 months correlation between Vestas and Formuepleje is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Formuepleje Limittellus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formuepleje Limittellus and Vestas 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 Vestas Wind Systems are associated (or correlated) with Formuepleje Limittellus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formuepleje Limittellus has no effect on the direction of Vestas Wind i.e., Vestas Wind and Formuepleje Limittellus go up and down completely randomly.

Pair Corralation between Vestas Wind and Formuepleje Limittellus

Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the Formuepleje Limittellus. In addition to that, Vestas Wind is 5.33 times more volatile than Formuepleje Limittellus. It trades about -0.2 of its total potential returns per unit of risk. Formuepleje Limittellus is currently generating about 0.28 per unit of volatility. If you would invest  28,068  in Formuepleje Limittellus on September 5, 2024 and sell it today you would earn a total of  1,522  from holding Formuepleje Limittellus or generate 5.42% return on investment over 90 days.

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

Vestas Wind Systems  vs.  Formuepleje Limittellus

Vestas Wind Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vestas Wind Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Formuepleje Limittellus

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Formuepleje Limittellus are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Formuepleje Limittellus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vestas Wind and Formuepleje Limittellus

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

The idea behind Vestas Wind Systems and Formuepleje Limittellus 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.