Correlation Between Ross Stores and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Norsk Hydro ASA, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Norsk Hydro.
Diversification Opportunities for Ross Stores and Norsk Hydro
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ross and Norsk is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores 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 Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and Norsk Hydro go up and down completely randomly.
Pair Corralation between Ross Stores and Norsk Hydro
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.79 times more return on investment than Norsk Hydro. However, Ross Stores is 1.26 times less risky than Norsk Hydro. It trades about 0.23 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.04 per unit of risk. If you would invest 12,860 in Ross Stores on September 5, 2024 and sell it today you would earn a total of 1,788 from holding Ross Stores or generate 13.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. Norsk Hydro ASA
Performance |
| Timeline |
| Ross Stores |
| Norsk Hydro ASA |
Ross Stores and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Norsk Hydro
The main advantage of trading using opposite Ross Stores and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. TOTAL GABON | Ross Stores vs. Walgreens Boots Alliance | Ross Stores vs. Peak Resources Limited |
| Norsk Hydro vs. CARSALESCOM | Norsk Hydro vs. Ross Stores | Norsk Hydro vs. Vastned Retail NV | Norsk Hydro vs. FAST RETAIL ADR |
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 CEOs Directory module to screen CEOs from public companies around the world.
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