Correlation Between Nordic Semiconductor and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and BBB Foods 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 BBB Foods 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 BBB Foods, you can compare the effects of market volatilities on Nordic Semiconductor and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and BBB Foods.
Diversification Opportunities for Nordic Semiconductor and BBB Foods
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and BBB is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and BBB Foods go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and BBB Foods
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to under-perform the BBB Foods. In addition to that, Nordic Semiconductor is 1.44 times more volatile than BBB Foods. It trades about 0.0 of its total potential returns per unit of risk. BBB Foods is currently generating about 0.13 per unit of volatility. If you would invest 1,750 in BBB Foods on August 28, 2024 and sell it today you would earn a total of 1,666 from holding BBB Foods or generate 95.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 40.81% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. BBB Foods
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| BBB Foods |
Nordic Semiconductor and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and BBB Foods
The main advantage of trading using opposite Nordic Semiconductor and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Nordic Semiconductor vs. Nordic Semiconductor ASA | Nordic Semiconductor vs. STMicroelectronics NV | Nordic Semiconductor vs. Rohm Co Ltd | Nordic Semiconductor vs. Asm Pacific Technology |
| BBB Foods vs. Kaltura | BBB Foods vs. Analog Devices | BBB Foods vs. Sabra Healthcare REIT | BBB Foods vs. Amkor Technology |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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