Correlation Between Tesla and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Tesla 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 Tesla and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Norsk Hydro ASA, you can compare the effects of market volatilities on Tesla 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 Tesla with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Norsk Hydro.
Diversification Opportunities for Tesla and Norsk Hydro
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tesla and Norsk is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc 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 Tesla 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 Tesla Inc 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 Tesla i.e., Tesla and Norsk Hydro go up and down completely randomly.
Pair Corralation between Tesla and Norsk Hydro
Assuming the 90 days horizon Tesla Inc is expected to generate 1.51 times more return on investment than Norsk Hydro. However, Tesla is 1.51 times more volatile than Norsk Hydro ASA. It trades about 0.12 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.01 per unit of risk. If you would invest 16,354 in Tesla Inc on November 7, 2024 and sell it today you would earn a total of 21,281 from holding Tesla Inc or generate 130.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Norsk Hydro ASA
Performance |
| Timeline |
| Tesla Inc |
| Norsk Hydro ASA |
Tesla and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Norsk Hydro
The main advantage of trading using opposite Tesla and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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.| Tesla vs. Rocket Internet SE | Tesla vs. Live Nation Entertainment | Tesla vs. ZINC MEDIA GR | Tesla vs. INTERSHOP Communications Aktiengesellschaft |
| Norsk Hydro vs. Norsk Hydro ASA | Norsk Hydro vs. Aluminum of | Norsk Hydro vs. Alcoa Corp | Norsk Hydro vs. AMAG Austria Metall |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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