Correlation Between Nordic Semiconductor and United Airlines
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on Nordic Semiconductor and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and United Airlines.
Diversification Opportunities for Nordic Semiconductor and United Airlines
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and United is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and United Airlines go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and United Airlines
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to under-perform the United Airlines. In addition to that, Nordic Semiconductor is 1.4 times more volatile than United Airlines Holdings. It trades about -0.01 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.09 per unit of volatility. If you would invest 3,776 in United Airlines Holdings on September 20, 2024 and sell it today you would earn a total of 5,910 from holding United Airlines Holdings or generate 156.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. United Airlines Holdings
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| United Airlines Holdings |
Nordic Semiconductor and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and United Airlines
The main advantage of trading using opposite Nordic Semiconductor and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' 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 |
| United Airlines vs. CleanTech Lithium plc | United Airlines vs. OneSavings Bank PLC | United Airlines vs. Home Depot | United Airlines vs. Blackstone Loan Financing |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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