Correlation Between Norsk Hydro and Digital Realty
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Digital Realty 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 Digital Realty 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 Digital Realty Trust, you can compare the effects of market volatilities on Norsk Hydro and Digital Realty 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 Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Digital Realty.
Diversification Opportunities for Norsk Hydro and Digital Realty
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Norsk and Digital is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Digital Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Realty Trust 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 Digital Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Realty Trust has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Digital Realty go up and down completely randomly.
Pair Corralation between Norsk Hydro and Digital Realty
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.15 times more return on investment than Digital Realty. However, Norsk Hydro is 1.15 times more volatile than Digital Realty Trust. It trades about -0.04 of its potential returns per unit of risk. Digital Realty Trust is currently generating about -0.15 per unit of risk. If you would invest 578.00 in Norsk Hydro ASA on December 2, 2024 and sell it today you would lose (10.00) from holding Norsk Hydro ASA or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Digital Realty Trust
Performance |
| Timeline |
| Norsk Hydro ASA |
| Digital Realty Trust |
Norsk Hydro and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Digital Realty
The main advantage of trading using opposite Norsk Hydro and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Digital Realty 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 Digital Realty will offset losses from the drop in Digital Realty's long position.| Norsk Hydro vs. Xiwang Special Steel | Norsk Hydro vs. Grupo Carso SAB | Norsk Hydro vs. Motorcar Parts of | Norsk Hydro vs. GEELY AUTOMOBILE |
| Digital Realty vs. Elmos Semiconductor SE | Digital Realty vs. Hua Hong Semiconductor | Digital Realty vs. EMBARK EDUCATION LTD | Digital Realty vs. CHINA EDUCATION GROUP |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |