Correlation Between STRAYER EDUCATION and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both STRAYER EDUCATION 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 STRAYER EDUCATION and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRAYER EDUCATION and Norsk Hydro ASA, you can compare the effects of market volatilities on STRAYER EDUCATION 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 STRAYER EDUCATION with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAYER EDUCATION and Norsk Hydro.
Diversification Opportunities for STRAYER EDUCATION and Norsk Hydro
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between STRAYER and Norsk is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding STRAYER EDUCATION 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 STRAYER EDUCATION 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 STRAYER EDUCATION 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 STRAYER EDUCATION i.e., STRAYER EDUCATION and Norsk Hydro go up and down completely randomly.
Pair Corralation between STRAYER EDUCATION and Norsk Hydro
Assuming the 90 days trading horizon STRAYER EDUCATION is expected to generate 0.48 times more return on investment than Norsk Hydro. However, STRAYER EDUCATION is 2.07 times less risky than Norsk Hydro. It trades about 0.03 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about -0.02 per unit of risk. If you would invest 9,191 in STRAYER EDUCATION on September 12, 2024 and sell it today you would earn a total of 59.00 from holding STRAYER EDUCATION or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STRAYER EDUCATION vs. Norsk Hydro ASA
Performance |
| Timeline |
| STRAYER EDUCATION |
| Norsk Hydro ASA |
STRAYER EDUCATION and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STRAYER EDUCATION and Norsk Hydro
The main advantage of trading using opposite STRAYER EDUCATION and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRAYER EDUCATION 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.| STRAYER EDUCATION vs. Apple Inc | STRAYER EDUCATION vs. Apple Inc | STRAYER EDUCATION vs. Apple Inc | STRAYER EDUCATION vs. Apple Inc |
| Norsk Hydro vs. Scandinavian Tobacco Group | Norsk Hydro vs. PACIFIC ONLINE | Norsk Hydro vs. Lamar Advertising | Norsk Hydro vs. STRAYER EDUCATION |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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