Correlation Between Big 5 and NORDIC HALIBUT
Can any of the company-specific risk be diversified away by investing in both Big 5 and NORDIC HALIBUT 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 Big 5 and NORDIC HALIBUT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big 5 Sporting and NORDIC HALIBUT AS, you can compare the effects of market volatilities on Big 5 and NORDIC HALIBUT 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 Big 5 with a short position of NORDIC HALIBUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and NORDIC HALIBUT.
Diversification Opportunities for Big 5 and NORDIC HALIBUT
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Big and NORDIC is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and NORDIC HALIBUT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDIC HALIBUT AS and Big 5 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 Big 5 Sporting are associated (or correlated) with NORDIC HALIBUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDIC HALIBUT AS has no effect on the direction of Big 5 i.e., Big 5 and NORDIC HALIBUT go up and down completely randomly.
Pair Corralation between Big 5 and NORDIC HALIBUT
Assuming the 90 days horizon Big 5 Sporting is expected to generate 1.02 times more return on investment than NORDIC HALIBUT. However, Big 5 is 1.02 times more volatile than NORDIC HALIBUT AS. It trades about -0.02 of its potential returns per unit of risk. NORDIC HALIBUT AS is currently generating about -0.23 per unit of risk. If you would invest 156.00 in Big 5 Sporting on September 13, 2024 and sell it today you would lose (4.00) from holding Big 5 Sporting or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big 5 Sporting vs. NORDIC HALIBUT AS
Performance |
| Timeline |
| Big 5 Sporting |
| NORDIC HALIBUT AS |
Big 5 and NORDIC HALIBUT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big 5 and NORDIC HALIBUT
The main advantage of trading using opposite Big 5 and NORDIC HALIBUT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, NORDIC HALIBUT 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 NORDIC HALIBUT will offset losses from the drop in NORDIC HALIBUT's long position.| Big 5 vs. Superior Plus Corp | Big 5 vs. SIVERS SEMICONDUCTORS AB | Big 5 vs. NorAm Drilling AS | Big 5 vs. Norsk Hydro ASA |
| NORDIC HALIBUT vs. Verizon Communications | NORDIC HALIBUT vs. Consolidated Communications Holdings | NORDIC HALIBUT vs. ARDAGH METAL PACDL 0001 | NORDIC HALIBUT vs. Cogent Communications Holdings |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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