Correlation Between Norsk Hydro and Intuit

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

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

Diversification Opportunities for Norsk Hydro and Intuit

-0.15

Correlation Coefficient

Norsk Hydro  Intuit

Good diversification

The 3 months correlation between Norsk and Intuit is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Intuit Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuit Inc and Norsk Hydro 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 Norsk Hydro ASA are associated (or correlated) with Intuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuit Inc has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Intuit go up and down completely randomly.

Pair Corralation between Norsk Hydro and Intuit

Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the Intuit. But the stock apears to be less risky and, when comparing its historical volatility, Norsk Hydro ASA is 1.17 times less risky than Intuit. The stock trades about -0.55 of its potential returns per unit of risk. The Intuit Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  61,300  in Intuit Inc on October 5, 2024 and sell it today you would earn a total of  60.00  from holding Intuit Inc or generate 0.1% return on investment over 90 days.

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

Norsk Hydro ASA  vs.  Intuit Inc

Norsk Hydro ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norsk Hydro ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Intuit Inc

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Intuit Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Intuit may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Norsk Hydro and Intuit

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

The idea behind Norsk Hydro ASA and Intuit Inc 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.