Correlation Between WT Offshore and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both WT Offshore 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 WT Offshore and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT Offshore and Nordic Semiconductor ASA, you can compare the effects of market volatilities on WT Offshore 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 WT Offshore with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT Offshore and Nordic Semiconductor.
Diversification Opportunities for WT Offshore and Nordic Semiconductor
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between WTI and Nordic is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore 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 WT Offshore 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 WT Offshore 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 WT Offshore i.e., WT Offshore and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between WT Offshore and Nordic Semiconductor
Considering the 90-day investment horizon WT Offshore is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, WT Offshore is 1.36 times less risky than Nordic Semiconductor. The stock trades about -0.05 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,680 in Nordic Semiconductor ASA on August 31, 2024 and sell it today you would lose (694.00) from holding Nordic Semiconductor ASA or give up 41.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
WT Offshore vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| WT Offshore |
| Nordic Semiconductor ASA |
WT Offshore and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT Offshore and Nordic Semiconductor
The main advantage of trading using opposite WT Offshore and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Offshore 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.| WT Offshore vs. Evolution Petroleum | WT Offshore vs. Ring Energy | WT Offshore vs. Gran Tierra Energy | WT Offshore vs. Permian Resources |
| Nordic Semiconductor vs. Power Integrations | Nordic Semiconductor vs. MACOM Technology Solutions | Nordic Semiconductor vs. Intchains Group Limited | Nordic Semiconductor vs. Vishay Intertechnology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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