Correlation Between Nidaros Sparebank and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Nidaros Sparebank and Nordic Semiconductor 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 Nidaros Sparebank and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nidaros Sparebank and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Nidaros Sparebank and Nordic Semiconductor 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 Nidaros Sparebank with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nidaros Sparebank and Nordic Semiconductor.
Diversification Opportunities for Nidaros Sparebank and Nordic Semiconductor
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nidaros and Nordic is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nidaros Sparebank and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA and Nidaros Sparebank 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 Nidaros Sparebank are associated (or correlated) with Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Nidaros Sparebank i.e., Nidaros Sparebank and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Nidaros Sparebank and Nordic Semiconductor
Assuming the 90 days trading horizon Nidaros Sparebank is expected to generate 3.63 times less return on investment than Nordic Semiconductor. But when comparing it to its historical volatility, Nidaros Sparebank is 2.68 times less risky than Nordic Semiconductor. It trades about 0.16 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 9,880 in Nordic Semiconductor ASA on November 27, 2024 and sell it today you would earn a total of 5,020 from holding Nordic Semiconductor ASA or generate 50.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nidaros Sparebank vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Nidaros Sparebank |
| Nordic Semiconductor ASA |
Nidaros Sparebank and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nidaros Sparebank and Nordic Semiconductor
The main advantage of trading using opposite Nidaros Sparebank and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nidaros Sparebank position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| Nidaros Sparebank vs. Austevoll Seafood ASA | Nidaros Sparebank vs. Bien Sparebank ASA | Nidaros Sparebank vs. Romerike Sparebank | Nidaros Sparebank vs. Kraft Bank Asa |
| Nordic Semiconductor vs. Storebrand ASA | Nordic Semiconductor vs. DnB ASA | Nordic Semiconductor vs. Telenor ASA | Nordic Semiconductor vs. Kongsberg Gruppen 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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