Correlation Between Adtalem Global and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Adtalem Global 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 Adtalem Global and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adtalem Global Education and Norsk Hydro ASA, you can compare the effects of market volatilities on Adtalem Global 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 Adtalem Global with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adtalem Global and Norsk Hydro.
Diversification Opportunities for Adtalem Global and Norsk Hydro
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adtalem and Norsk is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education 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 Adtalem Global 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 Adtalem Global Education 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 Adtalem Global i.e., Adtalem Global and Norsk Hydro go up and down completely randomly.
Pair Corralation between Adtalem Global and Norsk Hydro
Assuming the 90 days trading horizon Adtalem Global Education is expected to generate 0.87 times more return on investment than Norsk Hydro. However, Adtalem Global Education is 1.15 times less risky than Norsk Hydro. It trades about 0.25 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.07 per unit of risk. If you would invest 6,750 in Adtalem Global Education on August 29, 2024 and sell it today you would earn a total of 1,900 from holding Adtalem Global Education or generate 28.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adtalem Global Education vs. Norsk Hydro ASA
Performance |
| Timeline |
| Adtalem Global Education |
| Norsk Hydro ASA |
Adtalem Global and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adtalem Global and Norsk Hydro
The main advantage of trading using opposite Adtalem Global and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adtalem Global 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.| Adtalem Global vs. Apple Inc | Adtalem Global vs. Apple Inc | Adtalem Global vs. Apple Inc | Adtalem Global vs. Apple Inc |
| Norsk Hydro vs. Superior Plus Corp | Norsk Hydro vs. NMI Holdings | Norsk Hydro vs. SIVERS SEMICONDUCTORS AB | Norsk Hydro vs. Talanx AG |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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