Correlation Between Vestas Wind and GEA GROUP
Can any of the company-specific risk be diversified away by investing in both Vestas Wind and GEA GROUP 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 GEA GROUP 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 GEA GROUP, you can compare the effects of market volatilities on Vestas Wind and GEA GROUP 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 GEA GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and GEA GROUP.
Diversification Opportunities for Vestas Wind and GEA GROUP
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vestas and GEA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and GEA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEA GROUP 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 GEA GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEA GROUP has no effect on the direction of Vestas Wind i.e., Vestas Wind and GEA GROUP go up and down completely randomly.
Pair Corralation between Vestas Wind and GEA GROUP
Assuming the 90 days trading horizon Vestas Wind is expected to generate 3.23 times less return on investment than GEA GROUP. In addition to that, Vestas Wind is 2.17 times more volatile than GEA GROUP. It trades about 0.03 of its total potential returns per unit of risk. GEA GROUP is currently generating about 0.23 per unit of volatility. If you would invest 4,808 in GEA GROUP on December 28, 2024 and sell it today you would earn a total of 1,012 from holding GEA GROUP or generate 21.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Vestas Wind Systems vs. GEA GROUP
Performance |
Timeline |
Vestas Wind Systems |
GEA GROUP |
Vestas Wind and GEA GROUP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vestas Wind and GEA GROUP
The main advantage of trading using opposite Vestas Wind and GEA GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind position performs unexpectedly, GEA GROUP 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 GEA GROUP will offset losses from the drop in GEA GROUP's long position.Vestas Wind vs. Coeur Mining | Vestas Wind vs. GAMING FAC SA | Vestas Wind vs. Perseus Mining Limited | Vestas Wind vs. FUTURE GAMING GRP |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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