Correlation Between Norsk Hydro and Stryker
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Stryker 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 Stryker 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 Stryker, you can compare the effects of market volatilities on Norsk Hydro and Stryker 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 Stryker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Stryker.
Diversification Opportunities for Norsk Hydro and Stryker
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Norsk and Stryker is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Stryker go up and down completely randomly.
Pair Corralation between Norsk Hydro and Stryker
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.79 times more return on investment than Stryker. However, Norsk Hydro is 1.79 times more volatile than Stryker. It trades about 0.07 of its potential returns per unit of risk. Stryker is currently generating about 0.09 per unit of risk. If you would invest 479.00 in Norsk Hydro ASA on December 4, 2024 and sell it today you would earn a total of 99.00 from holding Norsk Hydro ASA or generate 20.67% 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. Stryker
Performance |
| Timeline |
| Norsk Hydro ASA |
| Stryker |
Norsk Hydro and Stryker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Stryker
The main advantage of trading using opposite Norsk Hydro and Stryker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Stryker 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 Stryker will offset losses from the drop in Stryker's long position.| Norsk Hydro vs. Caseys General Stores | Norsk Hydro vs. tokentus investment AG | Norsk Hydro vs. PennantPark Investment | Norsk Hydro vs. H2O Retailing |
| Stryker vs. PROSIEBENSAT1 MEDIADR4 | Stryker vs. ANTA Sports Products | Stryker vs. ProSiebenSat1 Media SE | Stryker vs. COSTCO WHOLESALE CDR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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