Correlation Between Aluminum and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Aluminum 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 Aluminum and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum and Norsk Hydro ASA, you can compare the effects of market volatilities on Aluminum 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 Aluminum with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminum and Norsk Hydro.
Diversification Opportunities for Aluminum and Norsk Hydro
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aluminum and Norsk is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum 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 Aluminum 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 Aluminum 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 Aluminum i.e., Aluminum and Norsk Hydro go up and down completely randomly.
Pair Corralation between Aluminum and Norsk Hydro
If you would invest 801.00 in Norsk Hydro ASA on February 7, 2024 and sell it today you would earn a total of 0.00 from holding Norsk Hydro ASA or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Aluminum vs. Norsk Hydro ASA
Performance |
Timeline |
Aluminum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Norsk Hydro ASA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aluminum and Norsk Hydro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aluminum and Norsk Hydro
The main advantage of trading using opposite Aluminum and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminum 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.Aluminum vs. Anhui Conch Cement | Aluminum vs. Nippon Steel Corp | Aluminum vs. Anhui Conch Cement | Aluminum vs. Anglo American plc |
Norsk Hydro vs. Kaiser Aluminum | Norsk Hydro vs. Century Aluminum | Norsk Hydro vs. China Hongqiao Group | Norsk Hydro vs. Alcoa Corp |
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.
Other Complementary Tools
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |