Correlation Between NTG Nordic and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both NTG Nordic and Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure Limited, you can compare the effects of market volatilities on NTG Nordic and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and Aristocrat Leisure.
Diversification Opportunities for NTG Nordic and Aristocrat Leisure
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NTG and Aristocrat is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of NTG Nordic i.e., NTG Nordic and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between NTG Nordic and Aristocrat Leisure
Assuming the 90 days trading horizon NTG Nordic is expected to generate 2.26 times less return on investment than Aristocrat Leisure. In addition to that, NTG Nordic is 1.52 times more volatile than Aristocrat Leisure Limited. It trades about 0.03 of its total potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.1 per unit of volatility. If you would invest 1,977 in Aristocrat Leisure Limited on September 5, 2024 and sell it today you would earn a total of 2,283 from holding Aristocrat Leisure Limited or generate 115.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
NTG Nordic Transport vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| NTG Nordic Transport |
| Aristocrat Leisure |
NTG Nordic and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and Aristocrat Leisure
The main advantage of trading using opposite NTG Nordic and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| NTG Nordic vs. Addus HomeCare | NTG Nordic vs. Canon Marketing Japan | NTG Nordic vs. FLOW TRADERS LTD | NTG Nordic vs. Auto Trader Group |
| Aristocrat Leisure vs. China BlueChemical | Aristocrat Leisure vs. Hemisphere Energy Corp | Aristocrat Leisure vs. INTERSHOP Communications Aktiengesellschaft | Aristocrat Leisure vs. Chunghwa Telecom Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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