Correlation Between Norsk Hydro and Live Nation
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Live Nation 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 Live Nation 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 Live Nation Entertainment, you can compare the effects of market volatilities on Norsk Hydro and Live Nation 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 Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Live Nation.
Diversification Opportunities for Norsk Hydro and Live Nation
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Norsk and Live is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment 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 Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Live Nation go up and down completely randomly.
Pair Corralation between Norsk Hydro and Live Nation
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the Live Nation. In addition to that, Norsk Hydro is 1.4 times more volatile than Live Nation Entertainment. It trades about -0.02 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.17 per unit of volatility. If you would invest 8,648 in Live Nation Entertainment on September 22, 2024 and sell it today you would earn a total of 4,072 from holding Live Nation Entertainment or generate 47.09% 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. Live Nation Entertainment
Performance |
| Timeline |
| Norsk Hydro ASA |
| Live Nation Entertainment |
Norsk Hydro and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Live Nation
The main advantage of trading using opposite Norsk Hydro and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.| Norsk Hydro vs. Perseus Mining Limited | Norsk Hydro vs. Ryanair Holdings plc | Norsk Hydro vs. SEALED AIR | Norsk Hydro vs. Harmony Gold Mining |
| Live Nation vs. DICKS Sporting Goods | Live Nation vs. Fukuyama Transporting Co | Live Nation vs. Transport International Holdings | Live Nation vs. PARKEN Sport Entertainment |
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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