Correlation Between Norbit ASA and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Norbit ASA and Dow 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 Norbit ASA and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norbit ASA and Dow Jones Industrial, you can compare the effects of market volatilities on Norbit ASA and Dow 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 Norbit ASA with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norbit ASA and Dow Jones.
Diversification Opportunities for Norbit ASA and Dow Jones
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norbit and Dow is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Norbit ASA and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Norbit ASA 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 Norbit ASA are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Norbit ASA i.e., Norbit ASA and Dow Jones go up and down completely randomly.
Pair Corralation between Norbit ASA and Dow Jones
Assuming the 90 days trading horizon Norbit ASA is expected to generate 10.42 times less return on investment than Dow Jones. In addition to that, Norbit ASA is 1.95 times more volatile than Dow Jones Industrial. It trades about 0.02 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.34 per unit of volatility. If you would invest 4,205,219 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 285,846 from holding Dow Jones Industrial or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Norbit ASA vs. Dow Jones Industrial
Performance |
| Timeline |
Norbit ASA and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Norbit ASA
Pair trading matchups for Norbit ASA
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Norbit ASA and Dow Jones
The main advantage of trading using opposite Norbit ASA and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norbit ASA position performs unexpectedly, Dow 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Norbit ASA vs. Lery Seafood Group | Norbit ASA vs. Techstep ASA | Norbit ASA vs. Awilco Drilling PLC | Norbit ASA vs. Shelf Drilling |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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