Correlation Between COSTCO WHOLESALE and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and Norsk Hydro 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 COSTCO WHOLESALE and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSTCO WHOLESALE CDR and Norsk Hydro ASA, you can compare the effects of market volatilities on COSTCO WHOLESALE and Norsk Hydro 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 COSTCO WHOLESALE with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and Norsk Hydro.
Diversification Opportunities for COSTCO WHOLESALE and Norsk Hydro
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between COSTCO and Norsk is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and Norsk Hydro ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsk Hydro ASA and COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR are associated (or correlated) with Norsk Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsk Hydro ASA has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and Norsk Hydro go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and Norsk Hydro
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to under-perform the Norsk Hydro. But the stock apears to be less risky and, when comparing its historical volatility, COSTCO WHOLESALE CDR is 1.52 times less risky than Norsk Hydro. The stock trades about -0.2 of its potential returns per unit of risk. The Norsk Hydro ASA is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 524.00 in Norsk Hydro ASA on October 20, 2024 and sell it today you would earn a total of 64.00 from holding Norsk Hydro ASA or generate 12.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. Norsk Hydro ASA
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| Norsk Hydro ASA |
COSTCO WHOLESALE and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and Norsk Hydro
The main advantage of trading using opposite COSTCO WHOLESALE and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, Norsk Hydro 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 Norsk Hydro will offset losses from the drop in Norsk Hydro's long position.| COSTCO WHOLESALE vs. Japan Asia Investment | COSTCO WHOLESALE vs. Platinum Investment Management | COSTCO WHOLESALE vs. OFFICE DEPOT | COSTCO WHOLESALE vs. CENTURIA OFFICE REIT |
| Norsk Hydro vs. China BlueChemical | Norsk Hydro vs. TOMBADOR IRON LTD | Norsk Hydro vs. Mitsui Chemicals | Norsk Hydro vs. Olympic Steel |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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