Correlation Between STAG Industrial and Yara International
Can any of the company-specific risk be diversified away by investing in both STAG Industrial and Yara International 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 STAG Industrial and Yara International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STAG Industrial and Yara International ASA, you can compare the effects of market volatilities on STAG Industrial and Yara International 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 STAG Industrial with a short position of Yara International. Check out your portfolio center. Please also check ongoing floating volatility patterns of STAG Industrial and Yara International.
Diversification Opportunities for STAG Industrial and Yara International
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STAG and Yara is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International ASA and STAG Industrial 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 STAG Industrial are associated (or correlated) with Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of STAG Industrial i.e., STAG Industrial and Yara International go up and down completely randomly.
Pair Corralation between STAG Industrial and Yara International
Assuming the 90 days horizon STAG Industrial is expected to generate 9.41 times less return on investment than Yara International. But when comparing it to its historical volatility, STAG Industrial is 1.62 times less risky than Yara International. It trades about 0.03 of its potential returns per unit of risk. Yara International ASA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,040 in Yara International ASA on September 15, 2024 and sell it today you would earn a total of 100.00 from holding Yara International ASA or generate 4.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.65% |
Values | Daily Returns |
STAG Industrial vs. Yara International ASA
Performance |
Timeline |
STAG Industrial |
Yara International ASA |
STAG Industrial and Yara International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with STAG Industrial and Yara International
The main advantage of trading using opposite STAG Industrial and Yara International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STAG Industrial position performs unexpectedly, Yara International 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 Yara International will offset losses from the drop in Yara International's long position.STAG Industrial vs. China Communications Services | ||
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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