Correlation Between NEL ASA and EBay
Can any of the company-specific risk be diversified away by investing in both NEL ASA and EBay 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 NEL ASA and EBay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEL ASA ADR30 and eBay Inc, you can compare the effects of market volatilities on NEL ASA and EBay 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 NEL ASA with a short position of EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEL ASA and EBay.
Diversification Opportunities for NEL ASA and EBay
Excellent diversification
The 3 months correlation between NEL and EBay is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NEL ASA ADR30 and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and NEL ASA 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 NEL ASA ADR30 are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of NEL ASA i.e., NEL ASA and EBay go up and down completely randomly.
Pair Corralation between NEL ASA and EBay
Assuming the 90 days trading horizon NEL ASA ADR30 is expected to under-perform the EBay. In addition to that, NEL ASA is 3.56 times more volatile than eBay Inc. It trades about -0.04 of its total potential returns per unit of risk. eBay Inc is currently generating about 0.07 per unit of volatility. If you would invest 4,130 in eBay Inc on August 31, 2024 and sell it today you would earn a total of 1,994 from holding eBay Inc or generate 48.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.16% |
| Values | Daily Returns |
NEL ASA ADR30 vs. eBay Inc
Performance |
| Timeline |
| NEL ASA ADR30 |
| eBay Inc |
NEL ASA and EBay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEL ASA and EBay
The main advantage of trading using opposite NEL ASA and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEL ASA position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.| NEL ASA vs. CarsalesCom | NEL ASA vs. Southwest Airlines Co | NEL ASA vs. United Airlines Holdings | NEL ASA vs. Salesforce |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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