Correlation Between Nordic Semiconductor and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Fortune Brands 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 Fortune Brands 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 Fortune Brands Home, you can compare the effects of market volatilities on Nordic Semiconductor and Fortune Brands 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 Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Fortune Brands.
Diversification Opportunities for Nordic Semiconductor and Fortune Brands
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordic and Fortune is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Fortune Brands go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Fortune Brands
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to under-perform the Fortune Brands. In addition to that, Nordic Semiconductor is 1.66 times more volatile than Fortune Brands Home. It trades about -0.02 of its total potential returns per unit of risk. Fortune Brands Home is currently generating about -0.03 per unit of volatility. If you would invest 7,891 in Fortune Brands Home on October 26, 2024 and sell it today you would lose (553.00) from holding Fortune Brands Home or give up 7.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Fortune Brands Home
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Fortune Brands Home |
Nordic Semiconductor and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Fortune Brands
The main advantage of trading using opposite Nordic Semiconductor and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| Nordic Semiconductor vs. Charter Communications Cl | Nordic Semiconductor vs. Extra Space Storage | Nordic Semiconductor vs. Abingdon Health Plc | Nordic Semiconductor vs. PureTech Health plc |
| Fortune Brands vs. Pressure Technologies Plc | Fortune Brands vs. Science in Sport | Fortune Brands vs. Jupiter Fund Management | Fortune Brands vs. Liontrust Asset 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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