Correlation Between North Energy and Icelandic Salmon
Can any of the company-specific risk be diversified away by investing in both North Energy and Icelandic Salmon 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 North Energy and Icelandic Salmon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Energy ASA and Icelandic Salmon As, you can compare the effects of market volatilities on North Energy and Icelandic Salmon 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 North Energy with a short position of Icelandic Salmon. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Energy and Icelandic Salmon.
Diversification Opportunities for North Energy and Icelandic Salmon
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between North and Icelandic is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and Icelandic Salmon As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icelandic Salmon and North Energy 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 North Energy ASA are associated (or correlated) with Icelandic Salmon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icelandic Salmon has no effect on the direction of North Energy i.e., North Energy and Icelandic Salmon go up and down completely randomly.
Pair Corralation between North Energy and Icelandic Salmon
Assuming the 90 days trading horizon North Energy ASA is expected to generate 0.89 times more return on investment than Icelandic Salmon. However, North Energy ASA is 1.13 times less risky than Icelandic Salmon. It trades about 0.05 of its potential returns per unit of risk. Icelandic Salmon As is currently generating about -0.03 per unit of risk. If you would invest 265.00 in North Energy ASA on September 1, 2024 and sell it today you would earn a total of 5.00 from holding North Energy ASA or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Energy ASA vs. Icelandic Salmon As
Performance |
| Timeline |
| North Energy ASA |
| Icelandic Salmon |
North Energy and Icelandic Salmon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Energy and Icelandic Salmon
The main advantage of trading using opposite North Energy and Icelandic Salmon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Energy position performs unexpectedly, Icelandic Salmon 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 Icelandic Salmon will offset losses from the drop in Icelandic Salmon's long position.| North Energy vs. Skue Sparebank | North Energy vs. Aasen Sparebank | North Energy vs. Proximar Seafood AS | North Energy vs. Nidaros Sparebank |
| Icelandic Salmon vs. Ice Fish Farm | Icelandic Salmon vs. Arctic Fish Holding | Icelandic Salmon vs. Salmon Evolution Holding | Icelandic Salmon vs. Grieg Seafood ASA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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