Correlation Between NTG Nordic and WESTERN DIGITAL
Can any of the company-specific risk be diversified away by investing in both NTG Nordic and WESTERN DIGITAL 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 WESTERN DIGITAL 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 WESTERN DIGITAL, you can compare the effects of market volatilities on NTG Nordic and WESTERN DIGITAL 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 WESTERN DIGITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and WESTERN DIGITAL.
Diversification Opportunities for NTG Nordic and WESTERN DIGITAL
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between NTG and WESTERN is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and WESTERN DIGITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN DIGITAL 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 WESTERN DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN DIGITAL has no effect on the direction of NTG Nordic i.e., NTG Nordic and WESTERN DIGITAL go up and down completely randomly.
Pair Corralation between NTG Nordic and WESTERN DIGITAL
Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the WESTERN DIGITAL. But the stock apears to be less risky and, when comparing its historical volatility, NTG Nordic Transport is 1.65 times less risky than WESTERN DIGITAL. The stock trades about -0.1 of its potential returns per unit of risk. The WESTERN DIGITAL is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6,054 in WESTERN DIGITAL on September 13, 2024 and sell it today you would earn a total of 608.00 from holding WESTERN DIGITAL or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NTG Nordic Transport vs. WESTERN DIGITAL
Performance |
| Timeline |
| NTG Nordic Transport |
| WESTERN DIGITAL |
NTG Nordic and WESTERN DIGITAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and WESTERN DIGITAL
The main advantage of trading using opposite NTG Nordic and WESTERN DIGITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic position performs unexpectedly, WESTERN DIGITAL 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 WESTERN DIGITAL will offset losses from the drop in WESTERN DIGITAL's long position.| NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. SIVERS SEMICONDUCTORS AB | NTG Nordic vs. NorAm Drilling AS | NTG Nordic vs. Norsk Hydro ASA |
| WESTERN DIGITAL vs. VIVA WINE GROUP | WESTERN DIGITAL vs. Zurich Insurance Group | WESTERN DIGITAL vs. Ping An Insurance | WESTERN DIGITAL vs. Goosehead Insurance |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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