Correlation Between Nordic Semiconductor and American Homes
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and American Homes 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 American Homes 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 American Homes 4, you can compare the effects of market volatilities on Nordic Semiconductor and American Homes 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 American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and American Homes.
Diversification Opportunities for Nordic Semiconductor and American Homes
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nordic and American is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 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 American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and American Homes go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and American Homes
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 1.79 times more return on investment than American Homes. However, Nordic Semiconductor is 1.79 times more volatile than American Homes 4. It trades about 0.06 of its potential returns per unit of risk. American Homes 4 is currently generating about -0.23 per unit of risk. If you would invest 10,778 in Nordic Semiconductor ASA on November 7, 2024 and sell it today you would earn a total of 317.00 from holding Nordic Semiconductor ASA or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. American Homes 4
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| American Homes 4 |
Nordic Semiconductor and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and American Homes
The main advantage of trading using opposite Nordic Semiconductor and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Nordic Semiconductor vs. Eastinco Mining Exploration | Nordic Semiconductor vs. Rheinmetall AG | Nordic Semiconductor vs. Adriatic Metals | Nordic Semiconductor vs. Tatton Asset Management |
| American Homes vs. Universal Music Group | American Homes vs. Tyson Foods Cl | American Homes vs. Associated British Foods | American Homes vs. United Internet AG |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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