Correlation Between Norsk Hydro and National Beverage
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and National Beverage 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 National Beverage 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 National Beverage Corp, you can compare the effects of market volatilities on Norsk Hydro and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and National Beverage.
Diversification Opportunities for Norsk Hydro and National Beverage
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norsk and National is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and National Beverage go up and down completely randomly.
Pair Corralation between Norsk Hydro and National Beverage
Assuming the 90 days trading horizon Norsk Hydro is expected to generate 1.74 times less return on investment than National Beverage. In addition to that, Norsk Hydro is 1.25 times more volatile than National Beverage Corp. It trades about 0.02 of its total potential returns per unit of risk. National Beverage Corp is currently generating about 0.04 per unit of volatility. If you would invest 4,135 in National Beverage Corp on September 13, 2024 and sell it today you would earn a total of 405.00 from holding National Beverage Corp or generate 9.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. National Beverage Corp
Performance |
| Timeline |
| Norsk Hydro ASA |
| National Beverage Corp |
Norsk Hydro and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and National Beverage
The main advantage of trading using opposite Norsk Hydro and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Norsk Hydro vs. Goosehead Insurance | Norsk Hydro vs. RETAIL FOOD GROUP | Norsk Hydro vs. COSTCO WHOLESALE CDR | Norsk Hydro vs. SBI Insurance Group |
| National Beverage vs. Superior Plus Corp | National Beverage vs. SIVERS SEMICONDUCTORS AB | National Beverage vs. NorAm Drilling AS | National Beverage vs. Norsk Hydro 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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