Correlation Between Retail Estates and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Nordic Semiconductor.
Diversification Opportunities for Retail Estates and Nordic Semiconductor
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Retail and Nordic is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV 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 Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Retail Estates and Nordic Semiconductor
Assuming the 90 days horizon Retail Estates NV is expected to generate 0.33 times more return on investment than Nordic Semiconductor. However, Retail Estates NV is 3.04 times less risky than Nordic Semiconductor. It trades about -0.1 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.04 per unit of risk. If you would invest 6,370 in Retail Estates NV on November 2, 2024 and sell it today you would lose (710.00) from holding Retail Estates NV or give up 11.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Retail Estates NV |
| Nordic Semiconductor ASA |
Retail Estates and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Nordic Semiconductor
The main advantage of trading using opposite Retail Estates and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Hyatt Hotels | Retail Estates vs. MHP Hotel AG | Retail Estates vs. MELIA HOTELS | Retail Estates vs. Mitsui Chemicals |
| Nordic Semiconductor vs. Sims Metal Management | Nordic Semiconductor vs. Waste Management | Nordic Semiconductor vs. Tianjin Capital Environmental | Nordic Semiconductor vs. Jupiter Fund Management |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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