Correlation Between Norsk Hydro and STELLA JONES
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and STELLA JONES 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 STELLA JONES 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 STELLA JONES INC, you can compare the effects of market volatilities on Norsk Hydro and STELLA JONES 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 STELLA JONES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and STELLA JONES.
Diversification Opportunities for Norsk Hydro and STELLA JONES
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Norsk and STELLA is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and STELLA JONES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STELLA JONES INC 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 STELLA JONES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STELLA JONES INC has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and STELLA JONES go up and down completely randomly.
Pair Corralation between Norsk Hydro and STELLA JONES
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.97 times more return on investment than STELLA JONES. However, Norsk Hydro ASA is 1.03 times less risky than STELLA JONES. It trades about 0.07 of its potential returns per unit of risk. STELLA JONES INC is currently generating about 0.04 per unit of risk. If you would invest 552.00 in Norsk Hydro ASA on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Norsk Hydro ASA or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. STELLA JONES INC
Performance |
| Timeline |
| Norsk Hydro ASA |
| STELLA JONES INC |
Norsk Hydro and STELLA JONES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and STELLA JONES
The main advantage of trading using opposite Norsk Hydro and STELLA JONES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, STELLA JONES 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 STELLA JONES will offset losses from the drop in STELLA JONES'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 |
| STELLA JONES vs. Sportsmans Warehouse Holdings | STELLA JONES vs. Ming Le Sports | STELLA JONES vs. VIAPLAY GROUP AB | STELLA JONES vs. ePlay Digital |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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