Correlation Between Morrow Bank and Nordic Technology
Can any of the company-specific risk be diversified away by investing in both Morrow Bank and Nordic Technology 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 Morrow Bank and Nordic Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morrow Bank ASA and Nordic Technology Group, you can compare the effects of market volatilities on Morrow Bank and Nordic Technology 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 Morrow Bank with a short position of Nordic Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morrow Bank and Nordic Technology.
Diversification Opportunities for Morrow Bank and Nordic Technology
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Morrow and Nordic is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Morrow Bank ASA and Nordic Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Technology and Morrow Bank 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 Morrow Bank ASA are associated (or correlated) with Nordic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Technology has no effect on the direction of Morrow Bank i.e., Morrow Bank and Nordic Technology go up and down completely randomly.
Pair Corralation between Morrow Bank and Nordic Technology
Assuming the 90 days trading horizon Morrow Bank ASA is expected to generate 0.15 times more return on investment than Nordic Technology. However, Morrow Bank ASA is 6.75 times less risky than Nordic Technology. It trades about 0.16 of its potential returns per unit of risk. Nordic Technology Group is currently generating about -0.03 per unit of risk. If you would invest 880.00 in Morrow Bank ASA on November 5, 2024 and sell it today you would earn a total of 56.00 from holding Morrow Bank ASA or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morrow Bank ASA vs. Nordic Technology Group
Performance |
| Timeline |
| Morrow Bank ASA |
| Nordic Technology |
Morrow Bank and Nordic Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morrow Bank and Nordic Technology
The main advantage of trading using opposite Morrow Bank and Nordic Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morrow Bank position performs unexpectedly, Nordic Technology 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 Technology will offset losses from the drop in Nordic Technology's long position.| Morrow Bank vs. Equinor ASA | Morrow Bank vs. DnB ASA | Morrow Bank vs. Aker BP ASA | Morrow Bank vs. Telenor ASA |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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