Correlation Between Integrated Wind and DNB NOR

Can any of the company-specific risk be diversified away by investing in both Integrated Wind and DNB NOR 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 Integrated Wind and DNB NOR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Integrated Wind Solutions and DNB NOR KAPFORV, you can compare the effects of market volatilities on Integrated Wind and DNB NOR 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 Integrated Wind with a short position of DNB NOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Wind and DNB NOR.

Diversification Opportunities for Integrated Wind and DNB NOR

0.53

Correlation Coefficient

Integrated Wind  DNB NOR

Very weak diversification

The 3 months correlation between Integrated and DNB is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Wind Solutions and DNB NOR KAPFORV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB NOR KAPFORV and Integrated 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 Integrated Wind Solutions are associated (or correlated) with DNB NOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB NOR KAPFORV has no effect on the direction of Integrated Wind i.e., Integrated Wind and DNB NOR go up and down completely randomly.

Pair Corralation between Integrated Wind and DNB NOR

Assuming the 90 days trading horizon Integrated Wind Solutions is expected to generate 17.71 times more return on investment than DNB NOR. However, Integrated Wind is 17.71 times more volatile than DNB NOR KAPFORV. It trades about 0.04 of its potential returns per unit of risk. DNB NOR KAPFORV is currently generating about 0.36 per unit of risk. If you would invest  4,660  in Integrated Wind Solutions on March 22, 2024 and sell it today you would earn a total of  120.00  from holding Integrated Wind Solutions or generate 2.58% return on investment over 90 days.

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

Integrated Wind Solutions  vs.  DNB NOR KAPFORV

Integrated Wind Solutions

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Integrated Wind Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Integrated Wind may actually be approaching a critical reversion point that can send shares even higher in July 2024.

DNB NOR KAPFORV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DNB NOR KAPFORV are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, DNB NOR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Integrated Wind and DNB NOR

The main advantage of trading using opposite Integrated Wind and DNB NOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Wind position performs unexpectedly, DNB NOR 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 DNB NOR will offset losses from the drop in DNB NOR's long position.

The idea behind Integrated Wind Solutions and DNB NOR KAPFORV 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.