Correlation Between Norsk Hydro and Dillards
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Dillards 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 Dillards 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 Dillards, you can compare the effects of market volatilities on Norsk Hydro and Dillards 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 Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Dillards.
Diversification Opportunities for Norsk Hydro and Dillards
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Norsk and Dillards is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards 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 Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Dillards go up and down completely randomly.
Pair Corralation between Norsk Hydro and Dillards
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.44 times more return on investment than Dillards. However, Norsk Hydro is 1.44 times more volatile than Dillards. It trades about 0.04 of its potential returns per unit of risk. Dillards is currently generating about 0.04 per unit of risk. If you would invest 411.00 in Norsk Hydro ASA on September 3, 2024 and sell it today you would earn a total of 176.00 from holding Norsk Hydro ASA or generate 42.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Dillards
Performance |
| Timeline |
| Norsk Hydro ASA |
| Dillards |
Norsk Hydro and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Dillards
The main advantage of trading using opposite Norsk Hydro and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Dillards 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 Dillards will offset losses from the drop in Dillards' long position.| Norsk Hydro vs. Apollo Medical Holdings | Norsk Hydro vs. Summit Hotel Properties | Norsk Hydro vs. Park Hotels Resorts | Norsk Hydro vs. MEDICAL FACILITIES NEW |
| Dillards vs. RYOHIN UNSPADR1 | Dillards vs. Superior Plus Corp | Dillards vs. NMI Holdings | Dillards vs. Origin Agritech |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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