Correlation Between Norsk Hydro and Gildan Activewear
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Gildan Activewear 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 Gildan Activewear 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 Gildan Activewear, you can compare the effects of market volatilities on Norsk Hydro and Gildan Activewear 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 Gildan Activewear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Gildan Activewear.
Diversification Opportunities for Norsk Hydro and Gildan Activewear
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Norsk and Gildan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Gildan Activewear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gildan Activewear 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 Gildan Activewear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gildan Activewear has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Gildan Activewear go up and down completely randomly.
Pair Corralation between Norsk Hydro and Gildan Activewear
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 2.51 times more return on investment than Gildan Activewear. However, Norsk Hydro is 2.51 times more volatile than Gildan Activewear. It trades about 0.07 of its potential returns per unit of risk. Gildan Activewear is currently generating about 0.11 per unit of risk. If you would invest 301.00 in Norsk Hydro ASA on September 12, 2024 and sell it today you would earn a total of 287.00 from holding Norsk Hydro ASA or generate 95.35% 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. Gildan Activewear
Performance |
| Timeline |
| Norsk Hydro ASA |
| Gildan Activewear |
Norsk Hydro and Gildan Activewear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Gildan Activewear
The main advantage of trading using opposite Norsk Hydro and Gildan Activewear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Gildan Activewear 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 Gildan Activewear will offset losses from the drop in Gildan Activewear'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 |
| Gildan Activewear vs. Superior Plus Corp | Gildan Activewear vs. SIVERS SEMICONDUCTORS AB | Gildan Activewear vs. Norsk Hydro ASA | Gildan Activewear vs. Reliance Steel Aluminum |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |