Correlation Between Home Depot and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Home Depot and Nordic Semiconductor 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 Home Depot and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Home Depot and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Home Depot and Nordic Semiconductor 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 Home Depot with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Nordic Semiconductor.
Diversification Opportunities for Home Depot and Nordic Semiconductor
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Nordic is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA and Home Depot 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 The Home Depot are associated (or correlated) with Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Home Depot i.e., Home Depot and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Home Depot and Nordic Semiconductor
Assuming the 90 days trading horizon Home Depot is expected to generate 3.4 times less return on investment than Nordic Semiconductor. In addition to that, Home Depot is 1.31 times more volatile than Nordic Semiconductor ASA. It trades about 0.2 of its total potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.9 per unit of volatility. If you would invest 847.00 in Nordic Semiconductor ASA on October 25, 2024 and sell it today you would earn a total of 144.00 from holding Nordic Semiconductor ASA or generate 17.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Home Depot |
| Nordic Semiconductor ASA |
Home Depot and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Nordic Semiconductor
The main advantage of trading using opposite Home Depot and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| Home Depot vs. Haverty Furniture Companies | Home Depot vs. Beazer Homes USA | Home Depot vs. Focus Home Interactive | Home Depot vs. Autohome ADR |
| Nordic Semiconductor vs. NVIDIA | Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Broadcom | Nordic Semiconductor vs. QUALCOMM Incorporated |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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