Correlation Between Solstad Offshore and Nationwide Building
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Nationwide Building 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 Solstad Offshore and Nationwide Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offshore ASA and Nationwide Building Society, you can compare the effects of market volatilities on Solstad Offshore and Nationwide Building 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 Solstad Offshore with a short position of Nationwide Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Nationwide Building.
Diversification Opportunities for Solstad Offshore and Nationwide Building
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solstad and Nationwide is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Nationwide Building Society in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Building and Solstad Offshore 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 Solstad Offshore ASA are associated (or correlated) with Nationwide Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Building has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Nationwide Building go up and down completely randomly.
Pair Corralation between Solstad Offshore and Nationwide Building
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 12.04 times more return on investment than Nationwide Building. However, Solstad Offshore is 12.04 times more volatile than Nationwide Building Society. It trades about 0.08 of its potential returns per unit of risk. Nationwide Building Society is currently generating about -0.22 per unit of risk. If you would invest 3,990 in Solstad Offshore ASA on October 29, 2024 and sell it today you would earn a total of 114.00 from holding Solstad Offshore ASA or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Nationwide Building Society
Performance |
| Timeline |
| Solstad Offshore ASA |
| Nationwide Building |
Solstad Offshore and Nationwide Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Nationwide Building
The main advantage of trading using opposite Solstad Offshore and Nationwide Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Nationwide Building 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 Nationwide Building will offset losses from the drop in Nationwide Building's long position.| Solstad Offshore vs. Eneraqua Technologies PLC | Solstad Offshore vs. Take Two Interactive Software | Solstad Offshore vs. Electronic Arts | Solstad Offshore vs. Samsung Electronics Co |
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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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