Correlation Between Northrop Grumman and Kongsberg Gruppen
Can any of the company-specific risk be diversified away by investing in both Northrop Grumman and Kongsberg Gruppen 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 Northrop Grumman and Kongsberg Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northrop Grumman and Kongsberg Gruppen ASA, you can compare the effects of market volatilities on Northrop Grumman and Kongsberg Gruppen 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 Northrop Grumman with a short position of Kongsberg Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northrop Grumman and Kongsberg Gruppen.
Diversification Opportunities for Northrop Grumman and Kongsberg Gruppen
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northrop and Kongsberg is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Northrop Grumman and Kongsberg Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kongsberg Gruppen ASA and Northrop Grumman 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 Northrop Grumman are associated (or correlated) with Kongsberg Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kongsberg Gruppen ASA has no effect on the direction of Northrop Grumman i.e., Northrop Grumman and Kongsberg Gruppen go up and down completely randomly.
Pair Corralation between Northrop Grumman and Kongsberg Gruppen
Considering the 90-day investment horizon Northrop Grumman is expected to generate 13.8 times less return on investment than Kongsberg Gruppen. But when comparing it to its historical volatility, Northrop Grumman is 3.22 times less risky than Kongsberg Gruppen. It trades about 0.03 of its potential returns per unit of risk. Kongsberg Gruppen ASA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,050 in Kongsberg Gruppen ASA on September 2, 2024 and sell it today you would earn a total of 6,550 from holding Kongsberg Gruppen ASA or generate 161.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.94% |
| Values | Daily Returns |
Northrop Grumman vs. Kongsberg Gruppen ASA
Performance |
| Timeline |
| Northrop Grumman |
| Kongsberg Gruppen ASA |
Northrop Grumman and Kongsberg Gruppen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northrop Grumman and Kongsberg Gruppen
The main advantage of trading using opposite Northrop Grumman and Kongsberg Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northrop Grumman position performs unexpectedly, Kongsberg Gruppen 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 Kongsberg Gruppen will offset losses from the drop in Kongsberg Gruppen's long position.| Northrop Grumman vs. Raytheon Technologies Corp | Northrop Grumman vs. General Dynamics | Northrop Grumman vs. The Boeing | Northrop Grumman vs. L3Harris Technologies |
| Kongsberg Gruppen vs. Firan Technology Group | Kongsberg Gruppen vs. 808 Renewable Energy | Kongsberg Gruppen vs. Park Electrochemical | Kongsberg Gruppen vs. Innovative Solutions and |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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