Correlation Between Nordic Semiconductor and Microsoft
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on Nordic Semiconductor and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Microsoft.
Diversification Opportunities for Nordic Semiconductor and Microsoft
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and Microsoft is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Microsoft go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Microsoft
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to under-perform the Microsoft. In addition to that, Nordic Semiconductor is 1.71 times more volatile than Microsoft. It trades about -0.14 of its total potential returns per unit of risk. Microsoft is currently generating about 0.25 per unit of volatility. If you would invest 37,427 in Microsoft on September 3, 2024 and sell it today you would earn a total of 2,418 from holding Microsoft or generate 6.46% 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. Microsoft
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Microsoft |
Nordic Semiconductor and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Microsoft
The main advantage of trading using opposite Nordic Semiconductor and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Nordic Semiconductor vs. NVIDIA | Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Advanced Micro Devices | Nordic Semiconductor vs. Intel |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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