Correlation Between Dometic Group and NCC AB
Can any of the company-specific risk be diversified away by investing in both Dometic Group and NCC AB 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 Dometic Group and NCC AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dometic Group AB and NCC AB, you can compare the effects of market volatilities on Dometic Group and NCC AB 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 Dometic Group with a short position of NCC AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dometic Group and NCC AB.
Diversification Opportunities for Dometic Group and NCC AB
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dometic and NCC is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dometic Group AB and NCC AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCC AB and Dometic 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 Dometic Group AB are associated (or correlated) with NCC AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCC AB has no effect on the direction of Dometic Group i.e., Dometic Group and NCC AB go up and down completely randomly.
Pair Corralation between Dometic Group and NCC AB
Assuming the 90 days trading horizon Dometic Group AB is expected to under-perform the NCC AB. In addition to that, Dometic Group is 2.3 times more volatile than NCC AB. It trades about -0.07 of its total potential returns per unit of risk. NCC AB is currently generating about 0.21 per unit of volatility. If you would invest 15,457 in NCC AB on September 1, 2024 and sell it today you would earn a total of 833.00 from holding NCC AB or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dometic Group AB vs. NCC AB
Performance |
| Timeline |
| Dometic Group AB |
| NCC AB |
Dometic Group and NCC AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dometic Group and NCC AB
The main advantage of trading using opposite Dometic Group and NCC AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dometic Group position performs unexpectedly, NCC AB 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 NCC AB will offset losses from the drop in NCC AB's long position.| Dometic Group vs. AB SKF | Dometic Group vs. Tele2 AB | Dometic Group vs. Sandvik AB | Dometic Group vs. Skanska AB |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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