Correlation Between Stolt Nielsen and Storebrand ASA
Can any of the company-specific risk be diversified away by investing in both Stolt Nielsen and Storebrand ASA 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 Stolt Nielsen and Storebrand ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stolt Nielsen Limited and Storebrand ASA, you can compare the effects of market volatilities on Stolt Nielsen and Storebrand ASA 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 Stolt Nielsen with a short position of Storebrand ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stolt Nielsen and Storebrand ASA.
Diversification Opportunities for Stolt Nielsen and Storebrand ASA
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stolt and Storebrand is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Stolt Nielsen Limited and Storebrand ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storebrand ASA and Stolt Nielsen 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 Stolt Nielsen Limited are associated (or correlated) with Storebrand ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storebrand ASA has no effect on the direction of Stolt Nielsen i.e., Stolt Nielsen and Storebrand ASA go up and down completely randomly.
Pair Corralation between Stolt Nielsen and Storebrand ASA
Assuming the 90 days trading horizon Stolt Nielsen Limited is expected to generate 1.32 times more return on investment than Storebrand ASA. However, Stolt Nielsen is 1.32 times more volatile than Storebrand ASA. It trades about 0.24 of its potential returns per unit of risk. Storebrand ASA is currently generating about 0.24 per unit of risk. If you would invest 38,530 in Stolt Nielsen Limited on February 23, 2024 and sell it today you would earn a total of 11,320 from holding Stolt Nielsen Limited or generate 29.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Stolt Nielsen Limited vs. Storebrand ASA
Performance |
Timeline |
Stolt Nielsen Limited |
Storebrand ASA |
Stolt Nielsen and Storebrand ASA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stolt Nielsen and Storebrand ASA
The main advantage of trading using opposite Stolt Nielsen and Storebrand ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stolt Nielsen position performs unexpectedly, Storebrand ASA 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 Storebrand ASA will offset losses from the drop in Storebrand ASA's long position.Stolt Nielsen vs. Grong Sparebank | Stolt Nielsen vs. Romerike Sparebank | Stolt Nielsen vs. Nordic Mining ASA | Stolt Nielsen vs. Sandnes Sparebank |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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