Correlation Between Norsk Hydro and Sportsmans Warehouse
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Sportsmans Warehouse 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 Sportsmans Warehouse 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 Sportsmans Warehouse Holdings, you can compare the effects of market volatilities on Norsk Hydro and Sportsmans Warehouse 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 Sportsmans Warehouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Sportsmans Warehouse.
Diversification Opportunities for Norsk Hydro and Sportsmans Warehouse
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and Sportsmans is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Sportsmans Warehouse Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans Warehouse 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 Sportsmans Warehouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans Warehouse has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Sportsmans Warehouse go up and down completely randomly.
Pair Corralation between Norsk Hydro and Sportsmans Warehouse
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.8 times more return on investment than Sportsmans Warehouse. However, Norsk Hydro ASA is 1.25 times less risky than Sportsmans Warehouse. It trades about 0.03 of its potential returns per unit of risk. Sportsmans Warehouse Holdings is currently generating about -0.03 per unit of risk. If you would invest 406.00 in Norsk Hydro ASA on September 14, 2024 and sell it today you would earn a total of 160.00 from holding Norsk Hydro ASA or generate 39.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Sportsmans Warehouse Holdings
Performance |
| Timeline |
| Norsk Hydro ASA |
| Sportsmans Warehouse |
Norsk Hydro and Sportsmans Warehouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Sportsmans Warehouse
The main advantage of trading using opposite Norsk Hydro and Sportsmans Warehouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Sportsmans Warehouse 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 Sportsmans Warehouse will offset losses from the drop in Sportsmans Warehouse's long position.| Norsk Hydro vs. Taylor Morrison Home | Norsk Hydro vs. American Homes 4 | Norsk Hydro vs. Haverty Furniture Companies | Norsk Hydro vs. Autohome ADR |
| Sportsmans Warehouse vs. Superior Plus Corp | Sportsmans Warehouse vs. SIVERS SEMICONDUCTORS AB | Sportsmans Warehouse vs. Norsk Hydro ASA | Sportsmans Warehouse vs. Reliance Steel Aluminum |
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 CEOs Directory module to screen CEOs from public companies around the world.
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