Correlation Between CATLIN GROUP and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP and Nordic Semiconductor 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 CATLIN GROUP and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Nordic Semiconductor ASA, you can compare the effects of market volatilities on CATLIN GROUP and Nordic Semiconductor 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 CATLIN GROUP with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Nordic Semiconductor.
Diversification Opportunities for CATLIN GROUP and Nordic Semiconductor
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CATLIN and Nordic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA and CATLIN GROUP 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 CATLIN GROUP are associated (or correlated) with Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of CATLIN GROUP i.e., CATLIN GROUP and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Nordic Semiconductor
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 0.26 times more return on investment than Nordic Semiconductor. However, CATLIN GROUP is 3.78 times less risky than Nordic Semiconductor. It trades about -0.11 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.13 per unit of risk. If you would invest 10,100 in CATLIN GROUP on September 3, 2024 and sell it today you would lose (700.00) from holding CATLIN GROUP or give up 6.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| CATLIN GROUP |
| Nordic Semiconductor ASA |
CATLIN GROUP and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Nordic Semiconductor
The main advantage of trading using opposite CATLIN GROUP and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP position performs unexpectedly, Nordic Semiconductor 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 Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| CATLIN GROUP vs. Molson Coors Beverage | CATLIN GROUP vs. Flowtech Fluidpower plc | CATLIN GROUP vs. CleanTech Lithium plc | CATLIN GROUP vs. Monster Beverage Corp |
| Nordic Semiconductor vs. Catalyst Media Group | Nordic Semiconductor vs. CATLIN GROUP | Nordic Semiconductor vs. Tamburi Investment Partners | Nordic Semiconductor vs. Magnora ASA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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