Correlation Between Norsk Hydro and Hollywood Bowl
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Hollywood Bowl 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 Hollywood Bowl 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 Hollywood Bowl Group, you can compare the effects of market volatilities on Norsk Hydro and Hollywood Bowl 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 Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Hollywood Bowl.
Diversification Opportunities for Norsk Hydro and Hollywood Bowl
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norsk and Hollywood is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group 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 Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Hollywood Bowl go up and down completely randomly.
Pair Corralation between Norsk Hydro and Hollywood Bowl
Assuming the 90 days trading horizon Norsk Hydro is expected to generate 1.25 times less return on investment than Hollywood Bowl. In addition to that, Norsk Hydro is 2.09 times more volatile than Hollywood Bowl Group. It trades about 0.07 of its total potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.19 per unit of volatility. If you would invest 376.00 in Hollywood Bowl Group on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Hollywood Bowl Group or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Hollywood Bowl Group
Performance |
| Timeline |
| Norsk Hydro ASA |
| Hollywood Bowl Group |
Norsk Hydro and Hollywood Bowl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Hollywood Bowl
The main advantage of trading using opposite Norsk Hydro and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl'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 |
| Hollywood Bowl vs. Superior Plus Corp | Hollywood Bowl vs. SIVERS SEMICONDUCTORS AB | Hollywood Bowl vs. Norsk Hydro ASA | Hollywood Bowl 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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