Correlation Between NEL ASA and Yara International
Can any of the company-specific risk be diversified away by investing in both NEL ASA and Yara International 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 Yara International 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 Yara International ASA, you can compare the effects of market volatilities on NEL ASA and Yara International 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 Yara International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEL ASA and Yara International.
Diversification Opportunities for NEL ASA and Yara International
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NEL and Yara is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NEL ASA ADR30 and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International ASA 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 Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of NEL ASA i.e., NEL ASA and Yara International go up and down completely randomly.
Pair Corralation between NEL ASA and Yara International
Assuming the 90 days trading horizon NEL ASA ADR30 is expected to under-perform the Yara International. In addition to that, NEL ASA is 3.76 times more volatile than Yara International ASA. It trades about -0.04 of its total potential returns per unit of risk. Yara International ASA is currently generating about -0.01 per unit of volatility. If you would invest 2,622 in Yara International ASA on August 31, 2024 and sell it today you would lose (342.00) from holding Yara International ASA or give up 13.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
NEL ASA ADR30 vs. Yara International ASA
Performance |
| Timeline |
| NEL ASA ADR30 |
| Yara International ASA |
NEL ASA and Yara International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEL ASA and Yara International
The main advantage of trading using opposite NEL ASA and Yara International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEL ASA position performs unexpectedly, Yara International 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 Yara International will offset losses from the drop in Yara International's long position.| NEL ASA vs. CarsalesCom | NEL ASA vs. Southwest Airlines Co | NEL ASA vs. United Airlines Holdings | NEL ASA vs. Salesforce |
| Yara International vs. SBA Communications Corp | Yara International vs. Hollywood Bowl Group | Yara International vs. Live Nation Entertainment | Yara International vs. LG Display Co |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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