Correlation Between Vestas Wind and FANUC PUNSPADR

Can any of the company-specific risk be diversified away by investing in both Vestas Wind and FANUC PUNSPADR 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 FANUC PUNSPADR 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 FANUC PUNSPADR 110, you can compare the effects of market volatilities on Vestas Wind and FANUC PUNSPADR 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 FANUC PUNSPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and FANUC PUNSPADR.

Diversification Opportunities for Vestas Wind and FANUC PUNSPADR

-0.06

Correlation Coefficient

Vestas Wind  FANUC PUNSPADR

Good diversification

The 3 months correlation between Vestas and FANUC is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and FANUC PUNSPADR 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FANUC PUNSPADR 110 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 FANUC PUNSPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FANUC PUNSPADR 110 has no effect on the direction of Vestas Wind i.e., Vestas Wind and FANUC PUNSPADR go up and down completely randomly.

Pair Corralation between Vestas Wind and FANUC PUNSPADR

Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the FANUC PUNSPADR. In addition to that, Vestas Wind is 1.36 times more volatile than FANUC PUNSPADR 110. It trades about -0.15 of its total potential returns per unit of risk. FANUC PUNSPADR 110 is currently generating about -0.01 per unit of volatility. If you would invest  1,250  in FANUC PUNSPADR 110 on September 3, 2024 and sell it today you would lose (50.00) from holding FANUC PUNSPADR 110 or give up 4.0% of portfolio value over 90 days.

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

Vestas Wind Systems  vs.  FANUC PUNSPADR 110

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. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

FANUC PUNSPADR 110

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FANUC PUNSPADR 110 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, FANUC PUNSPADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vestas Wind and FANUC PUNSPADR

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

The idea behind Vestas Wind Systems and FANUC PUNSPADR 110 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.