Correlation Between Power Integrations and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Power Integrations and Nordic Semiconductor 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 Power Integrations and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Integrations and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Power Integrations and Nordic Semiconductor 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 Power Integrations with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Integrations and Nordic Semiconductor.
Diversification Opportunities for Power Integrations and Nordic Semiconductor
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Nordic is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Power Integrations and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA and Power Integrations 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 Power Integrations are associated (or correlated) with Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Power Integrations i.e., Power Integrations and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Power Integrations and Nordic Semiconductor
Given the investment horizon of 90 days Power Integrations is expected to generate 3.35 times more return on investment than Nordic Semiconductor. However, Power Integrations is 3.35 times more volatile than Nordic Semiconductor ASA. It trades about 0.1 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.18 per unit of risk. If you would invest 6,263 in Power Integrations on September 2, 2024 and sell it today you would earn a total of 288.00 from holding Power Integrations or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Power Integrations vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Power Integrations |
| Nordic Semiconductor ASA |
Power Integrations and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Integrations and Nordic Semiconductor
The main advantage of trading using opposite Power Integrations and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Integrations position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| Power Integrations vs. Diodes Incorporated | Power Integrations vs. MACOM Technology Solutions | Power Integrations vs. Cirrus Logic | Power Integrations vs. Amkor Technology |
| Nordic Semiconductor vs. Nordic Semiconductor ASA | Nordic Semiconductor vs. STMicroelectronics NV | Nordic Semiconductor vs. Rohm Co Ltd | Nordic Semiconductor vs. Asm Pacific 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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