Correlation Between OPEN HOUSE and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both OPEN HOUSE and NorAm Drilling 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 OPEN HOUSE and NorAm Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OPEN HOUSE GROUP and NorAm Drilling AS, you can compare the effects of market volatilities on OPEN HOUSE and NorAm Drilling 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 OPEN HOUSE with a short position of NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPEN HOUSE and NorAm Drilling.
Diversification Opportunities for OPEN HOUSE and NorAm Drilling
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OPEN and NorAm is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding OPEN HOUSE GROUP and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS and OPEN HOUSE 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 OPEN HOUSE GROUP are associated (or correlated) with NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of OPEN HOUSE i.e., OPEN HOUSE and NorAm Drilling go up and down completely randomly.
Pair Corralation between OPEN HOUSE and NorAm Drilling
Assuming the 90 days horizon OPEN HOUSE GROUP is expected to generate 0.41 times more return on investment than NorAm Drilling. However, OPEN HOUSE GROUP is 2.44 times less risky than NorAm Drilling. It trades about 0.06 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about -0.02 per unit of risk. If you would invest 3,400 in OPEN HOUSE GROUP on September 1, 2024 and sell it today you would earn a total of 80.00 from holding OPEN HOUSE GROUP or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OPEN HOUSE GROUP vs. NorAm Drilling AS
Performance |
| Timeline |
| OPEN HOUSE GROUP |
| NorAm Drilling AS |
OPEN HOUSE and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OPEN HOUSE and NorAm Drilling
The main advantage of trading using opposite OPEN HOUSE and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPEN HOUSE position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling's long position.| OPEN HOUSE vs. Austevoll Seafood ASA | OPEN HOUSE vs. United Natural Foods | OPEN HOUSE vs. MCEWEN MINING INC | OPEN HOUSE vs. Perseus Mining Limited |
| NorAm Drilling vs. Martin Marietta Materials | NorAm Drilling vs. Reinsurance Group of | NorAm Drilling vs. ZURICH INSURANCE GROUP | NorAm Drilling vs. LIFENET INSURANCE 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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