Correlation Between NTG Nordic and LEGACY IRON
Can any of the company-specific risk be diversified away by investing in both NTG Nordic and LEGACY IRON 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 NTG Nordic and LEGACY IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTG Nordic Transport and LEGACY IRON ORE, you can compare the effects of market volatilities on NTG Nordic and LEGACY IRON 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 NTG Nordic with a short position of LEGACY IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and LEGACY IRON.
Diversification Opportunities for NTG Nordic and LEGACY IRON
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between NTG and LEGACY is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and LEGACY IRON ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGACY IRON ORE and NTG Nordic 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 NTG Nordic Transport are associated (or correlated) with LEGACY IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGACY IRON ORE has no effect on the direction of NTG Nordic i.e., NTG Nordic and LEGACY IRON go up and down completely randomly.
Pair Corralation between NTG Nordic and LEGACY IRON
Assuming the 90 days trading horizon NTG Nordic Transport is expected to generate 5.31 times more return on investment than LEGACY IRON. However, NTG Nordic is 5.31 times more volatile than LEGACY IRON ORE. It trades about 0.01 of its potential returns per unit of risk. LEGACY IRON ORE is currently generating about -0.06 per unit of risk. If you would invest 3,925 in NTG Nordic Transport on September 1, 2024 and sell it today you would lose (95.00) from holding NTG Nordic Transport or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NTG Nordic Transport vs. LEGACY IRON ORE
Performance |
| Timeline |
| NTG Nordic Transport |
| LEGACY IRON ORE |
NTG Nordic and LEGACY IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and LEGACY IRON
The main advantage of trading using opposite NTG Nordic and LEGACY IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic position performs unexpectedly, LEGACY IRON 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 LEGACY IRON will offset losses from the drop in LEGACY IRON's long position.| NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. NMI Holdings | NTG Nordic vs. Origin Agritech | NTG Nordic vs. SIVERS SEMICONDUCTORS AB |
| LEGACY IRON vs. SIVERS SEMICONDUCTORS AB | LEGACY IRON vs. Darden Restaurants | LEGACY IRON vs. Reliance Steel Aluminum | LEGACY IRON vs. Q2M Managementberatung AG |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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