Correlation Between Nordic Semiconductor and Cintas Corp
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Cintas Corp 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 Cintas Corp 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 Cintas Corp, you can compare the effects of market volatilities on Nordic Semiconductor and Cintas Corp 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 Cintas Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Cintas Corp.
Diversification Opportunities for Nordic Semiconductor and Cintas Corp
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nordic and Cintas is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Cintas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas Corp 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 Cintas Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cintas Corp has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Cintas Corp go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Cintas Corp
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 0.8 times more return on investment than Cintas Corp. However, Nordic Semiconductor ASA is 1.25 times less risky than Cintas Corp. It trades about 0.1 of its potential returns per unit of risk. Cintas Corp is currently generating about -0.12 per unit of risk. If you would invest 9,987 in Nordic Semiconductor ASA on September 14, 2024 and sell it today you would earn a total of 341.00 from holding Nordic Semiconductor ASA or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Cintas Corp
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Cintas Corp |
Nordic Semiconductor and Cintas Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Cintas Corp
The main advantage of trading using opposite Nordic Semiconductor and Cintas Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Cintas Corp 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 Cintas Corp will offset losses from the drop in Cintas Corp's long position.| Nordic Semiconductor vs. Samsung Electronics Co | Nordic Semiconductor vs. Samsung Electronics Co | Nordic Semiconductor vs. Hyundai Motor | Nordic Semiconductor vs. Reliance Industries Ltd |
| Cintas Corp vs. Cizzle Biotechnology Holdings | Cintas Corp vs. Cornish Metals | Cintas Corp vs. Panther Metals PLC | Cintas Corp vs. Young Cos Brewery |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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