Correlation Between Nordic Semiconductor and Avis Budget
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Avis Budget 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 Nordic Semiconductor and Avis Budget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Semiconductor ASA and Avis Budget Group, you can compare the effects of market volatilities on Nordic Semiconductor and Avis Budget 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 Nordic Semiconductor with a short position of Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Avis Budget.
Diversification Opportunities for Nordic Semiconductor and Avis Budget
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and Avis is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Avis Budget Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avis Budget Group and Nordic Semiconductor 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 Nordic Semiconductor ASA are associated (or correlated) with Avis Budget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avis Budget Group has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Avis Budget go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Avis Budget
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 1.3 times more return on investment than Avis Budget. However, Nordic Semiconductor is 1.3 times more volatile than Avis Budget Group. It trades about -0.01 of its potential returns per unit of risk. Avis Budget Group is currently generating about -0.02 per unit of risk. If you would invest 1,850 in Nordic Semiconductor ASA on August 26, 2024 and sell it today you would lose (864.00) from holding Nordic Semiconductor ASA or give up 46.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Avis Budget Group
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Avis Budget Group |
Nordic Semiconductor and Avis Budget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Avis Budget
The main advantage of trading using opposite Nordic Semiconductor and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Avis Budget 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 Avis Budget will offset losses from the drop in Avis Budget's long position.| Nordic Semiconductor vs. NVIDIA | Nordic Semiconductor vs. Intel | Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Marvell Technology Group |
| Avis Budget vs. Hertz Global Hldgs | Avis Budget vs. Ryder System | Avis Budget vs. HE Equipment Services | Avis Budget vs. United Rentals |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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