Correlation Between Noranda Aluminum and Oatly Group
Can any of the company-specific risk be diversified away by investing in both Noranda Aluminum and Oatly Group 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 Noranda Aluminum and Oatly Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noranda Aluminum Holding and Oatly Group AB, you can compare the effects of market volatilities on Noranda Aluminum and Oatly Group 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 Noranda Aluminum with a short position of Oatly Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noranda Aluminum and Oatly Group.
Diversification Opportunities for Noranda Aluminum and Oatly Group
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Noranda and Oatly is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Noranda Aluminum Holding and Oatly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oatly Group AB and Noranda Aluminum 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 Noranda Aluminum Holding are associated (or correlated) with Oatly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oatly Group AB has no effect on the direction of Noranda Aluminum i.e., Noranda Aluminum and Oatly Group go up and down completely randomly.
Pair Corralation between Noranda Aluminum and Oatly Group
If you would invest (100.00) in Noranda Aluminum Holding on September 2, 2024 and sell it today you would earn a total of 100.00 from holding Noranda Aluminum Holding or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Noranda Aluminum Holding vs. Oatly Group AB
Performance |
| Timeline |
| Noranda Aluminum Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Oatly Group AB |
Noranda Aluminum and Oatly Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noranda Aluminum and Oatly Group
The main advantage of trading using opposite Noranda Aluminum and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noranda Aluminum position performs unexpectedly, Oatly Group 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 Oatly Group will offset losses from the drop in Oatly Group's long position.| Noranda Aluminum vs. Oatly Group AB | Noranda Aluminum vs. National Vision Holdings | Noranda Aluminum vs. Titan Machinery | Noranda Aluminum vs. Diageo PLC ADR |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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