Correlation Between Nordic Iron and Norion Bank
Can any of the company-specific risk be diversified away by investing in both Nordic Iron and Norion Bank 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 Iron and Norion Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Iron Ore and Norion Bank, you can compare the effects of market volatilities on Nordic Iron and Norion Bank 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 Iron with a short position of Norion Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Iron and Norion Bank.
Diversification Opportunities for Nordic Iron and Norion Bank
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and Norion is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Iron Ore and Norion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norion Bank and Nordic Iron 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 Iron Ore are associated (or correlated) with Norion Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norion Bank has no effect on the direction of Nordic Iron i.e., Nordic Iron and Norion Bank go up and down completely randomly.
Pair Corralation between Nordic Iron and Norion Bank
Assuming the 90 days trading horizon Nordic Iron Ore is expected to generate 1.69 times more return on investment than Norion Bank. However, Nordic Iron is 1.69 times more volatile than Norion Bank. It trades about 0.05 of its potential returns per unit of risk. Norion Bank is currently generating about -0.11 per unit of risk. If you would invest 486.00 in Nordic Iron Ore on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Nordic Iron Ore or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Iron Ore vs. Norion Bank
Performance |
| Timeline |
| Nordic Iron Ore |
| Norion Bank |
Nordic Iron and Norion Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Iron and Norion Bank
The main advantage of trading using opposite Nordic Iron and Norion Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Iron position performs unexpectedly, Norion Bank 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 Norion Bank will offset losses from the drop in Norion Bank's long position.| Nordic Iron vs. Leading Edge Materials | Nordic Iron vs. Alzinova AB | Nordic Iron vs. SaltX Technology Holding | Nordic Iron vs. KABE Group AB |
| Norion Bank vs. SolTech Energy Sweden | Norion Bank vs. Raketech Group Holding | Norion Bank vs. Invisio Communications AB | Norion Bank vs. Filo Mining Corp |
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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