Correlation Between Nordic Semiconductor and WesBanco

Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and WesBanco 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 WesBanco 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 WesBanco, you can compare the effects of market volatilities on Nordic Semiconductor and WesBanco 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 WesBanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and WesBanco.

Diversification Opportunities for Nordic Semiconductor and WesBanco

-0.56

Correlation Coefficient

Nordic Semiconductor  WesBanco

Excellent diversification

The 3 months correlation between Nordic and WesBanco is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and WesBanco go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and WesBanco

Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 11.81 times more return on investment than WesBanco. However, Nordic Semiconductor is 11.81 times more volatile than WesBanco. It trades about 0.07 of its potential returns per unit of risk. WesBanco is currently generating about 0.0 per unit of risk. If you would invest  873.00  in Nordic Semiconductor ASA on October 8, 2024 and sell it today you would earn a total of  27.00  from holding Nordic Semiconductor ASA or generate 3.09% 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.  WesBanco

Nordic Semiconductor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

WesBanco

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nordic Semiconductor and WesBanco

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

The idea behind Nordic Semiconductor ASA and WesBanco 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.