Correlation Between Nordic Semiconductor and Sparebank
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Sparebank 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 Sparebank 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 Sparebank 1 SR, you can compare the effects of market volatilities on Nordic Semiconductor and Sparebank 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 Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Sparebank.
Diversification Opportunities for Nordic Semiconductor and Sparebank
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nordic and Sparebank is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Sparebank go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Sparebank
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to under-perform the Sparebank. In addition to that, Nordic Semiconductor is 1.23 times more volatile than Sparebank 1 SR. It trades about -0.24 of its total potential returns per unit of risk. Sparebank 1 SR is currently generating about -0.02 per unit of volatility. If you would invest 14,580 in Sparebank 1 SR on September 3, 2024 and sell it today you would lose (100.00) from holding Sparebank 1 SR or give up 0.69% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nordic Semiconductor ASA vs. Sparebank 1 SR
Performance |
Timeline |
Nordic Semiconductor ASA |
Sparebank 1 SR |
Nordic Semiconductor and Sparebank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nordic Semiconductor and Sparebank
The main advantage of trading using opposite Nordic Semiconductor and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.Nordic Semiconductor vs. Catalyst Media Group | Nordic Semiconductor vs. CATLIN GROUP | Nordic Semiconductor vs. Tamburi Investment Partners | Nordic Semiconductor vs. Magnora ASA |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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