Correlation Between Lendinvest PLC and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Lendinvest PLC 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 Lendinvest PLC and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendinvest PLC and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Lendinvest PLC 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 Lendinvest PLC with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendinvest PLC and Nordic Semiconductor.
Diversification Opportunities for Lendinvest PLC and Nordic Semiconductor
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lendinvest and Nordic is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lendinvest PLC 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 Lendinvest PLC 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 Lendinvest PLC 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 Lendinvest PLC i.e., Lendinvest PLC and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Lendinvest PLC and Nordic Semiconductor
Assuming the 90 days trading horizon Lendinvest PLC is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Lendinvest PLC is 1.34 times less risky than Nordic Semiconductor. The stock trades about -0.06 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 17,573 in Nordic Semiconductor ASA on August 30, 2024 and sell it today you would lose (7,674) from holding Nordic Semiconductor ASA or give up 43.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Lendinvest PLC vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Lendinvest PLC |
| Nordic Semiconductor ASA |
Lendinvest PLC and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendinvest PLC and Nordic Semiconductor
The main advantage of trading using opposite Lendinvest PLC and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendinvest PLC 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.| Lendinvest PLC vs. Toyota Motor Corp | Lendinvest PLC vs. Neometals | Lendinvest PLC vs. Coor Service Management | Lendinvest PLC vs. Jupiter Fund Management |
| Nordic Semiconductor vs. Lendinvest PLC | Nordic Semiconductor vs. Neometals | Nordic Semiconductor vs. Albion Technology General | Nordic Semiconductor vs. Jupiter Fund Management |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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