Correlation Between MPC Container and Norske Skog
Can any of the company-specific risk be diversified away by investing in both MPC Container and Norske Skog 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 MPC Container and Norske Skog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MPC Container Ships and Norske Skog Asa, you can compare the effects of market volatilities on MPC Container and Norske Skog 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 MPC Container with a short position of Norske Skog. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPC Container and Norske Skog.
Diversification Opportunities for MPC Container and Norske Skog
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MPC and Norske is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding MPC Container Ships and Norske Skog Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norske Skog Asa and MPC Container 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 MPC Container Ships are associated (or correlated) with Norske Skog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norske Skog Asa has no effect on the direction of MPC Container i.e., MPC Container and Norske Skog go up and down completely randomly.
Pair Corralation between MPC Container and Norske Skog
Assuming the 90 days trading horizon MPC Container Ships is expected to generate 0.65 times more return on investment than Norske Skog. However, MPC Container Ships is 1.54 times less risky than Norske Skog. It trades about 0.01 of its potential returns per unit of risk. Norske Skog Asa is currently generating about -0.04 per unit of risk. If you would invest 2,169 in MPC Container Ships on September 1, 2024 and sell it today you would lose (6.00) from holding MPC Container Ships or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MPC Container Ships vs. Norske Skog Asa
Performance |
| Timeline |
| MPC Container Ships |
| Norske Skog Asa |
MPC Container and Norske Skog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MPC Container and Norske Skog
The main advantage of trading using opposite MPC Container and Norske Skog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPC Container position performs unexpectedly, Norske Skog 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 Norske Skog will offset losses from the drop in Norske Skog's long position.| MPC Container vs. Havila Shipping ASA | MPC Container vs. Shelf Drilling | MPC Container vs. Solstad Offsho | MPC Container vs. Eidesvik Offshore ASA |
| Norske Skog vs. Hoegh Autoliners ASA | Norske Skog vs. Reach Subsea | Norske Skog vs. Elkem ASA | Norske Skog vs. Integrated Wind Solutions |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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