Correlation Between Nordic Semiconductor and New Residential
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and New Residential 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 Nordic Semiconductor and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Semiconductor ASA and New Residential Investment, you can compare the effects of market volatilities on Nordic Semiconductor and New Residential 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 Nordic Semiconductor with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and New Residential.
Diversification Opportunities for Nordic Semiconductor and New Residential
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nordic and New is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve and Nordic Semiconductor 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 Nordic Semiconductor ASA are associated (or correlated) with New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and New Residential go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and New Residential
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 6.06 times more return on investment than New Residential. However, Nordic Semiconductor is 6.06 times more volatile than New Residential Investment. It trades about 0.22 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.19 per unit of risk. If you would invest 912.00 in Nordic Semiconductor ASA on November 8, 2024 and sell it today you would earn a total of 252.00 from holding Nordic Semiconductor ASA or generate 27.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. New Residential Investment
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| New Residential Inve |
Nordic Semiconductor and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and New Residential
The main advantage of trading using opposite Nordic Semiconductor and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Nordic Semiconductor vs. Mitsui Chemicals | Nordic Semiconductor vs. Darden Restaurants | Nordic Semiconductor vs. RETAIL FOOD GROUP | Nordic Semiconductor vs. EITZEN CHEMICALS |
| New Residential vs. Nok Airlines PCL | New Residential vs. COSTCO WHOLESALE CDR | New Residential vs. Singapore Airlines Limited | New Residential vs. SINGAPORE AIRLINES |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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