Correlation Between Dillards and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Dillards 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 Dillards and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dillards and Norsk Hydro ASA, you can compare the effects of market volatilities on Dillards 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 Dillards with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and Norsk Hydro.
Diversification Opportunities for Dillards and Norsk Hydro
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dillards and Norsk is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dillards 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 Dillards 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 Dillards 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 Dillards i.e., Dillards and Norsk Hydro go up and down completely randomly.
Pair Corralation between Dillards and Norsk Hydro
Assuming the 90 days trading horizon Dillards is expected to generate 1.03 times more return on investment than Norsk Hydro. However, Dillards is 1.03 times more volatile than Norsk Hydro ASA. It trades about 0.03 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.01 per unit of risk. If you would invest 39,347 in Dillards on September 3, 2024 and sell it today you would earn a total of 2,653 from holding Dillards or generate 6.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dillards vs. Norsk Hydro ASA
Performance |
| Timeline |
| Dillards |
| Norsk Hydro ASA |
Dillards and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dillards and Norsk Hydro
The main advantage of trading using opposite Dillards and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards 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.| Dillards vs. RYOHIN UNSPADR1 | Dillards vs. Superior Plus Corp | Dillards vs. NMI Holdings | Dillards vs. Origin Agritech |
| Norsk Hydro vs. Apollo Medical Holdings | Norsk Hydro vs. Summit Hotel Properties | Norsk Hydro vs. Park Hotels Resorts | Norsk Hydro vs. MEDICAL FACILITIES NEW |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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