Correlation Between Nel ASA and IDEX

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

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

Diversification Opportunities for Nel ASA and IDEX

-0.28

Correlation Coefficient

Nel ASA  IDEX

Very good diversification

The 3 months correlation between Nel and IDEX is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX and Nel ASA 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 Nel ASA are associated (or correlated) with IDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX has no effect on the direction of Nel ASA i.e., Nel ASA and IDEX go up and down completely randomly.

Pair Corralation between Nel ASA and IDEX

Assuming the 90 days horizon Nel ASA is expected to generate 5.42 times more return on investment than IDEX. However, Nel ASA is 5.42 times more volatile than IDEX Corporation. It trades about 0.05 of its potential returns per unit of risk. IDEX Corporation is currently generating about -0.12 per unit of risk. If you would invest  26.00  in Nel ASA on December 26, 2024 and sell it today you would earn a total of  1.00  from holding Nel ASA or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Nel ASA  vs.  IDEX Corp.

Nel ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nel ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nel ASA reported solid returns over the last few months and may actually be approaching a breakup point.

IDEX

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDEX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nel ASA and IDEX

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

The idea behind Nel ASA and IDEX Corporation 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.