Correlation Between Nel ASA and Nordson
Can any of the company-specific risk be diversified away by investing in both Nel ASA and Nordson 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 Nel ASA and Nordson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nel ASA and Nordson, you can compare the effects of market volatilities on Nel ASA and Nordson 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 Nel ASA with a short position of Nordson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nel ASA and Nordson.
Diversification Opportunities for Nel ASA and Nordson
Very good diversification
The 3 months correlation between Nel and Nordson is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and Nordson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordson and Nel ASA 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 Nel ASA are associated (or correlated) with Nordson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordson has no effect on the direction of Nel ASA i.e., Nel ASA and Nordson go up and down completely randomly.
Pair Corralation between Nel ASA and Nordson
Assuming the 90 days horizon Nel ASA is expected to under-perform the Nordson. In addition to that, Nel ASA is 2.36 times more volatile than Nordson. It trades about -0.36 of its total potential returns per unit of risk. Nordson is currently generating about 0.16 per unit of volatility. If you would invest 24,903 in Nordson on September 2, 2024 and sell it today you would earn a total of 1,196 from holding Nordson or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nel ASA vs. Nordson
Performance |
| Timeline |
| Nel ASA |
| Nordson |
Nel ASA and Nordson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nel ASA and Nordson
The main advantage of trading using opposite Nel ASA and Nordson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nel ASA position performs unexpectedly, Nordson 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 Nordson will offset losses from the drop in Nordson's long position.| Nel ASA vs. GE Aerospace | Nel ASA vs. Eaton PLC | Nel ASA vs. Parker Hannifin | Nel ASA vs. Illinois Tool Works |
| Nordson vs. Illinois Tool Works | Nordson vs. Pentair PLC | Nordson vs. Parker Hannifin | Nordson vs. Emerson Electric |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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