Correlation Between NORDIC HALIBUT and WATSCO INC
Can any of the company-specific risk be diversified away by investing in both NORDIC HALIBUT and WATSCO INC 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 HALIBUT and WATSCO INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORDIC HALIBUT AS and WATSCO INC B, you can compare the effects of market volatilities on NORDIC HALIBUT and WATSCO INC 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 HALIBUT with a short position of WATSCO INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORDIC HALIBUT and WATSCO INC.
Diversification Opportunities for NORDIC HALIBUT and WATSCO INC
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NORDIC and WATSCO is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding NORDIC HALIBUT AS and WATSCO INC B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WATSCO INC B and NORDIC HALIBUT 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 HALIBUT AS are associated (or correlated) with WATSCO INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WATSCO INC B has no effect on the direction of NORDIC HALIBUT i.e., NORDIC HALIBUT and WATSCO INC go up and down completely randomly.
Pair Corralation between NORDIC HALIBUT and WATSCO INC
Assuming the 90 days horizon NORDIC HALIBUT AS is expected to under-perform the WATSCO INC. In addition to that, NORDIC HALIBUT is 1.39 times more volatile than WATSCO INC B. It trades about -0.01 of its total potential returns per unit of risk. WATSCO INC B is currently generating about 0.03 per unit of volatility. If you would invest 37,001 in WATSCO INC B on September 12, 2024 and sell it today you would earn a total of 4,399 from holding WATSCO INC B or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORDIC HALIBUT AS vs. WATSCO INC B
Performance |
| Timeline |
| NORDIC HALIBUT AS |
| WATSCO INC B |
NORDIC HALIBUT and WATSCO INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORDIC HALIBUT and WATSCO INC
The main advantage of trading using opposite NORDIC HALIBUT and WATSCO INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORDIC HALIBUT position performs unexpectedly, WATSCO INC 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 WATSCO INC will offset losses from the drop in WATSCO INC's long position.| NORDIC HALIBUT vs. BJs Wholesale Club | NORDIC HALIBUT vs. Ross Stores | NORDIC HALIBUT vs. PICKN PAY STORES | NORDIC HALIBUT vs. Solstad Offshore 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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