Correlation Between Nordic Semiconductor and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on Nordic Semiconductor and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Volkswagen.
Diversification Opportunities for Nordic Semiconductor and Volkswagen
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nordic and Volkswagen is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Volkswagen go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Volkswagen
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 1.45 times more return on investment than Volkswagen. However, Nordic Semiconductor is 1.45 times more volatile than Volkswagen AG. It trades about 0.09 of its potential returns per unit of risk. Volkswagen AG is currently generating about 0.09 per unit of risk. If you would invest 835.00 in Nordic Semiconductor ASA on September 13, 2024 and sell it today you would earn a total of 29.00 from holding Nordic Semiconductor ASA or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Volkswagen AG
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Volkswagen AG |
Nordic Semiconductor and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Volkswagen
The main advantage of trading using opposite Nordic Semiconductor and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Broadcom | Nordic Semiconductor vs. Superior Plus Corp | Nordic Semiconductor vs. SIVERS SEMICONDUCTORS AB |
| Volkswagen vs. HK Electric Investments | Volkswagen vs. INDO RAMA SYNTHETIC | Volkswagen vs. China BlueChemical | Volkswagen vs. ECHO INVESTMENT ZY |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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