Correlation Between Southwest Gas and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Southwest Gas 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 Southwest Gas and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Gas Holdings and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Southwest Gas 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 Southwest Gas with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Gas and Nordic Semiconductor.
Diversification Opportunities for Southwest Gas and Nordic Semiconductor
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southwest and Nordic is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Gas Holdings 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 Southwest Gas 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 Southwest Gas Holdings 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 Southwest Gas i.e., Southwest Gas and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Southwest Gas and Nordic Semiconductor
Considering the 90-day investment horizon Southwest Gas Holdings is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Southwest Gas Holdings is 5.8 times less risky than Nordic Semiconductor. The stock trades about -0.03 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 939.00 in Nordic Semiconductor ASA on December 5, 2024 and sell it today you would earn a total of 279.00 from holding Nordic Semiconductor ASA or generate 29.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Southwest Gas Holdings vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Southwest Gas Holdings |
| Nordic Semiconductor ASA |
Southwest Gas and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Gas and Nordic Semiconductor
The main advantage of trading using opposite Southwest Gas and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Gas 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.| Southwest Gas vs. NewJersey Resources | ||
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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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