Correlation Between Var Energi and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Var Energi 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 Var Energi and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Var Energi ASA and Norsk Hydro ASA, you can compare the effects of market volatilities on Var Energi 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 Var Energi with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Var Energi and Norsk Hydro.
Diversification Opportunities for Var Energi and Norsk Hydro
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Var and Norsk is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA 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 Var Energi 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 Var Energi ASA 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 Var Energi i.e., Var Energi and Norsk Hydro go up and down completely randomly.
Pair Corralation between Var Energi and Norsk Hydro
Assuming the 90 days trading horizon Var Energi ASA is expected to generate 0.96 times more return on investment than Norsk Hydro. However, Var Energi ASA is 1.04 times less risky than Norsk Hydro. It trades about 0.07 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.0 per unit of risk. If you would invest 1,971 in Var Energi ASA on November 27, 2024 and sell it today you would earn a total of 1,330 from holding Var Energi ASA or generate 67.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Var Energi ASA vs. Norsk Hydro ASA
Performance |
| Timeline |
| Var Energi ASA |
| Norsk Hydro ASA |
Var Energi and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Var Energi and Norsk Hydro
The main advantage of trading using opposite Var Energi and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Var Energi 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.| Var Energi vs. Aker BP ASA | Var Energi vs. Belships | Var Energi vs. MPC Container Ships | Var Energi vs. BW Energy |
| Norsk Hydro vs. Yara International ASA | Norsk Hydro vs. Equinor ASA | Norsk Hydro vs. Telenor ASA | Norsk Hydro vs. Orkla ASA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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