Correlation Between DELTA AIR and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both DELTA AIR and Norsk Hydro 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 DELTA AIR and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DELTA AIR LINES and Norsk Hydro ASA, you can compare the effects of market volatilities on DELTA AIR and Norsk Hydro 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 DELTA AIR with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of DELTA AIR and Norsk Hydro.
Diversification Opportunities for DELTA AIR and Norsk Hydro
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DELTA and Norsk is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and Norsk Hydro ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsk Hydro ASA and DELTA AIR 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 DELTA AIR LINES are associated (or correlated) with Norsk Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsk Hydro ASA has no effect on the direction of DELTA AIR i.e., DELTA AIR and Norsk Hydro go up and down completely randomly.
Pair Corralation between DELTA AIR and Norsk Hydro
Assuming the 90 days trading horizon DELTA AIR LINES is expected to generate 1.51 times more return on investment than Norsk Hydro. However, DELTA AIR is 1.51 times more volatile than Norsk Hydro ASA. It trades about -0.02 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about -0.56 per unit of risk. If you would invest 5,920 in DELTA AIR LINES on September 20, 2024 and sell it today you would lose (69.00) from holding DELTA AIR LINES or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DELTA AIR LINES vs. Norsk Hydro ASA
Performance |
| Timeline |
| DELTA AIR LINES |
| Norsk Hydro ASA |
DELTA AIR and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DELTA AIR and Norsk Hydro
The main advantage of trading using opposite DELTA AIR and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DELTA AIR position performs unexpectedly, Norsk Hydro 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 Norsk Hydro will offset losses from the drop in Norsk Hydro's long position.| DELTA AIR vs. UNIVMUSIC GRPADR050 | DELTA AIR vs. JAPAN AIRLINES | DELTA AIR vs. KENNAMETAL INC | DELTA AIR vs. SINGAPORE AIRLINES |
| Norsk Hydro vs. NORWEGIAN AIR SHUT | Norsk Hydro vs. Seven West Media | Norsk Hydro vs. DELTA AIR LINES | Norsk Hydro vs. Westinghouse Air Brake |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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