Correlation Between JLT MOBILE and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both JLT MOBILE 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 JLT MOBILE and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JLT MOBILE PUTER and Nordic Semiconductor ASA, you can compare the effects of market volatilities on JLT MOBILE 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 JLT MOBILE with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLT MOBILE and Nordic Semiconductor.
Diversification Opportunities for JLT MOBILE and Nordic Semiconductor
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between JLT and Nordic is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding JLT MOBILE PUTER 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 JLT MOBILE 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 JLT MOBILE PUTER 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 JLT MOBILE i.e., JLT MOBILE and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between JLT MOBILE and Nordic Semiconductor
Assuming the 90 days trading horizon JLT MOBILE PUTER is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, JLT MOBILE PUTER is 1.36 times less risky than Nordic Semiconductor. The stock trades about -0.03 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,654 in Nordic Semiconductor ASA on September 12, 2024 and sell it today you would lose (796.00) from holding Nordic Semiconductor ASA or give up 48.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JLT MOBILE PUTER vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| JLT MOBILE PUTER |
| Nordic Semiconductor ASA |
JLT MOBILE and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JLT MOBILE and Nordic Semiconductor
The main advantage of trading using opposite JLT MOBILE and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JLT MOBILE 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.The idea behind JLT MOBILE PUTER and Nordic Semiconductor ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Broadcom | Nordic Semiconductor vs. Superior Plus Corp | Nordic Semiconductor vs. SIVERS SEMICONDUCTORS 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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