Correlation Between Nordic Semiconductor and Phillips

Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Phillips 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 Nordic Semiconductor and Phillips into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nordic Semiconductor ASA and Phillips 66, you can compare the effects of market volatilities on Nordic Semiconductor and Phillips 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 Nordic Semiconductor with a short position of Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Phillips.

Diversification Opportunities for Nordic Semiconductor and Phillips

-0.55

Correlation Coefficient

Nordic Semiconductor  Phillips

Excellent diversification

The 3 months correlation between Nordic and Phillips is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and Nordic Semiconductor 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 Nordic Semiconductor ASA are associated (or correlated) with Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Phillips go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and Phillips

Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 1.07 times more return on investment than Phillips. However, Nordic Semiconductor is 1.07 times more volatile than Phillips 66. It trades about 0.08 of its potential returns per unit of risk. Phillips 66 is currently generating about -0.05 per unit of risk. If you would invest  810.00  in Nordic Semiconductor ASA on October 8, 2024 and sell it today you would earn a total of  68.00  from holding Nordic Semiconductor ASA or generate 8.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nordic Semiconductor ASA  vs.  Phillips 66

Nordic Semiconductor ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nordic Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Phillips is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nordic Semiconductor and Phillips

The main advantage of trading using opposite Nordic Semiconductor and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Phillips 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 Phillips will offset losses from the drop in Phillips' long position.

The idea behind Nordic Semiconductor ASA and Phillips 66 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.