Correlation Between Norsk Hydro and CITY OFFICE
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and CITY OFFICE 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 CITY OFFICE 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 CITY OFFICE REIT, you can compare the effects of market volatilities on Norsk Hydro and CITY OFFICE 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 CITY OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and CITY OFFICE.
Diversification Opportunities for Norsk Hydro and CITY OFFICE
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and CITY is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and CITY OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITY OFFICE REIT 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 CITY OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITY OFFICE REIT has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and CITY OFFICE go up and down completely randomly.
Pair Corralation between Norsk Hydro and CITY OFFICE
Assuming the 90 days trading horizon Norsk Hydro is expected to generate 7.56 times less return on investment than CITY OFFICE. But when comparing it to its historical volatility, Norsk Hydro ASA is 1.19 times less risky than CITY OFFICE. It trades about 0.03 of its potential returns per unit of risk. CITY OFFICE REIT is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 470.00 in CITY OFFICE REIT on September 12, 2024 and sell it today you would earn a total of 70.00 from holding CITY OFFICE REIT or generate 14.89% 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. CITY OFFICE REIT
Performance |
| Timeline |
| Norsk Hydro ASA |
| CITY OFFICE REIT |
Norsk Hydro and CITY OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and CITY OFFICE
The main advantage of trading using opposite Norsk Hydro and CITY OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, CITY OFFICE 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 CITY OFFICE will offset losses from the drop in CITY OFFICE's long position.| Norsk Hydro vs. Aluminum of | Norsk Hydro vs. Kaiser Aluminum | Norsk Hydro vs. Superior Plus Corp | Norsk Hydro vs. SIVERS SEMICONDUCTORS AB |
| CITY OFFICE vs. Office Properties Income | CITY OFFICE vs. CREMECOMTRSBI DL 001 | CITY OFFICE vs. Superior Plus Corp | CITY OFFICE vs. SIVERS SEMICONDUCTORS AB |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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