Correlation Between Norsk Hydro and Constellium
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Constellium 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 Norsk Hydro and Constellium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norsk Hydro ASA and Constellium Nv, you can compare the effects of market volatilities on Norsk Hydro and Constellium 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 Norsk Hydro with a short position of Constellium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Constellium.
Diversification Opportunities for Norsk Hydro and Constellium
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and Constellium is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv and Norsk Hydro 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 Norsk Hydro ASA are associated (or correlated) with Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Constellium go up and down completely randomly.
Pair Corralation between Norsk Hydro and Constellium
If you would invest 801.00 in Norsk Hydro ASA on November 2, 2024 and sell it today you would earn a total of 0.00 from holding Norsk Hydro ASA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.26% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Constellium Nv
Performance |
| Timeline |
| Norsk Hydro ASA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Constellium Nv |
Norsk Hydro and Constellium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Constellium
The main advantage of trading using opposite Norsk Hydro and Constellium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Constellium 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 Constellium will offset losses from the drop in Constellium's long position.| Norsk Hydro vs. Kaiser Aluminum | Norsk Hydro vs. Century Aluminum | Norsk Hydro vs. China Hongqiao Group | Norsk Hydro vs. Alcoa Corp |
| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Norsk Hydro ASA |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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