Correlation Between Nordic Semiconductor and Alliance Data
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Alliance Data 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 Nordic Semiconductor and Alliance Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Semiconductor ASA and Alliance Data Systems, you can compare the effects of market volatilities on Nordic Semiconductor and Alliance Data 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 Nordic Semiconductor with a short position of Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Alliance Data.
Diversification Opportunities for Nordic Semiconductor and Alliance Data
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordic and Alliance is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems and Nordic Semiconductor 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 Nordic Semiconductor ASA are associated (or correlated) with Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Alliance Data go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Alliance Data
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to under-perform the Alliance Data. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Semiconductor ASA is 1.04 times less risky than Alliance Data. The stock trades about -0.02 of its potential returns per unit of risk. The Alliance Data Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,724 in Alliance Data Systems on September 4, 2024 and sell it today you would earn a total of 2,274 from holding Alliance Data Systems or generate 61.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.51% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Alliance Data Systems
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Alliance Data Systems |
Nordic Semiconductor and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Alliance Data
The main advantage of trading using opposite Nordic Semiconductor and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Alliance Data 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 Alliance Data will offset losses from the drop in Alliance Data's long position.| Nordic Semiconductor vs. Wyndham Hotels Resorts | Nordic Semiconductor vs. BW Offshore | Nordic Semiconductor vs. Gear4music Plc | Nordic Semiconductor vs. Morgan Advanced Materials |
| Alliance Data vs. Smithson Investment Trust | Alliance Data vs. Coor Service Management | Alliance Data vs. Impax Asset Management | Alliance Data vs. Waste Management |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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