Correlation Between Nordic Semiconductor and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Discover Financial 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 Discover Financial 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 Discover Financial Services, you can compare the effects of market volatilities on Nordic Semiconductor and Discover Financial 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 Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Discover Financial.
Diversification Opportunities for Nordic Semiconductor and Discover Financial
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordic and Discover is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial 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 Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Discover Financial go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Discover Financial
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to under-perform the Discover Financial. In addition to that, Nordic Semiconductor is 1.56 times more volatile than Discover Financial Services. It trades about -0.01 of its total potential returns per unit of risk. Discover Financial Services is currently generating about 0.06 per unit of volatility. If you would invest 9,902 in Discover Financial Services on October 11, 2024 and sell it today you would earn a total of 7,735 from holding Discover Financial Services or generate 78.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.59% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Discover Financial Services
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Discover Financial |
Nordic Semiconductor and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Discover Financial
The main advantage of trading using opposite Nordic Semiconductor and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Discover Financial 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| Nordic Semiconductor vs. Cizzle Biotechnology Holdings | Nordic Semiconductor vs. Edita Food Industries | Nordic Semiconductor vs. Spotify Technology SA | Nordic Semiconductor vs. Alfa Financial Software |
| Discover Financial vs. Westlake Chemical Corp | Discover Financial vs. Everyman Media Group | Discover Financial vs. Liberty Media Corp | Discover Financial vs. JD Sports Fashion |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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