Correlation Between Nordic Semiconductor and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Iridium Communications 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 Iridium Communications 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 Iridium Communications, you can compare the effects of market volatilities on Nordic Semiconductor and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Iridium Communications.
Diversification Opportunities for Nordic Semiconductor and Iridium Communications
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordic and Iridium is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Iridium Communications go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Iridium Communications
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 1.1 times more return on investment than Iridium Communications. However, Nordic Semiconductor is 1.1 times more volatile than Iridium Communications. It trades about 0.16 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.06 per unit of risk. If you would invest 864.00 in Nordic Semiconductor ASA on October 11, 2024 and sell it today you would earn a total of 48.00 from holding Nordic Semiconductor ASA or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Iridium Communications
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Iridium Communications |
Nordic Semiconductor and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Iridium Communications
The main advantage of trading using opposite Nordic Semiconductor and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Nordic Semiconductor vs. Clean Energy Fuels | Nordic Semiconductor vs. Ultra Clean Holdings | Nordic Semiconductor vs. Major Drilling Group | Nordic Semiconductor vs. ZURICH INSURANCE GROUP |
| Iridium Communications vs. NURAN WIRELESS INC | Iridium Communications vs. Vienna Insurance Group | Iridium Communications vs. Japan Post Insurance | Iridium Communications vs. KENEDIX OFFICE INV |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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