Correlation Between Nordic Semiconductor and Industrial
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Industrial 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 Industrial 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 Industrial and Commercial, you can compare the effects of market volatilities on Nordic Semiconductor and Industrial 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 Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Industrial.
Diversification Opportunities for Nordic Semiconductor and Industrial
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nordic and Industrial is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial 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 Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Industrial go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Industrial
Assuming the 90 days horizon Nordic Semiconductor is expected to generate 13.56 times less return on investment than Industrial. But when comparing it to its historical volatility, Nordic Semiconductor ASA is 3.98 times less risky than Industrial. It trades about 0.08 of its potential returns per unit of risk. Industrial and Commercial is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 44.00 in Industrial and Commercial on October 9, 2024 and sell it today you would earn a total of 16.00 from holding Industrial and Commercial or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Industrial and Commercial
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Industrial and Commercial |
Nordic Semiconductor and Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Industrial
The main advantage of trading using opposite Nordic Semiconductor and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.| Nordic Semiconductor vs. The Home Depot | Nordic Semiconductor vs. INDOFOOD AGRI RES | Nordic Semiconductor vs. DFS Furniture PLC | Nordic Semiconductor vs. Ebro Foods SA |
| Industrial vs. GungHo Online Entertainment | Industrial vs. Live Nation Entertainment | Industrial vs. Hollywood Bowl Group | Industrial vs. Dave Busters Entertainment |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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