Correlation Between Itron and SKAGEN Global
Can any of the company-specific risk be diversified away by investing in both Itron and SKAGEN Global 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 Itron and SKAGEN Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itron Inc and SKAGEN Global A, you can compare the effects of market volatilities on Itron and SKAGEN Global 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 Itron with a short position of SKAGEN Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itron and SKAGEN Global.
Diversification Opportunities for Itron and SKAGEN Global
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Itron and SKAGEN is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Itron Inc and SKAGEN Global A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKAGEN Global A and Itron 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 Itron Inc are associated (or correlated) with SKAGEN Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKAGEN Global A has no effect on the direction of Itron i.e., Itron and SKAGEN Global go up and down completely randomly.
Pair Corralation between Itron and SKAGEN Global
Given the investment horizon of 90 days Itron Inc is expected to generate 3.59 times more return on investment than SKAGEN Global. However, Itron is 3.59 times more volatile than SKAGEN Global A. It trades about 0.05 of its potential returns per unit of risk. SKAGEN Global A is currently generating about 0.07 per unit of risk. If you would invest 7,653 in Itron Inc on January 24, 2024 and sell it today you would earn a total of 1,493 from holding Itron Inc or generate 19.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.46% |
Values | Daily Returns |
Itron Inc vs. SKAGEN Global A
Performance |
Timeline |
Itron Inc |
SKAGEN Global A |
Itron and SKAGEN Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Itron and SKAGEN Global
The main advantage of trading using opposite Itron and SKAGEN Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itron position performs unexpectedly, SKAGEN Global 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 SKAGEN Global will offset losses from the drop in SKAGEN Global's long position.The idea behind Itron Inc and SKAGEN Global A 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.SKAGEN Global vs. Novo Nordisk AS | SKAGEN Global vs. Nordea Bank Abp | SKAGEN Global vs. DSV Panalpina AS | SKAGEN Global vs. AP Mller |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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