Correlation Between Noranda Aluminum and Corteva

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

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

Diversification Opportunities for Noranda Aluminum and Corteva

-0.56

Correlation Coefficient

Noranda Aluminum  Corteva

Excellent diversification

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

Pair Corralation between Noranda Aluminum and Corteva

If you would invest  5,557  in Corteva on September 3, 2024 and sell it today you would earn a total of  667.00  from holding Corteva or generate 12.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Noranda Aluminum Holding  vs.  Corteva

Noranda Aluminum Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noranda Aluminum Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Noranda Aluminum is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Corteva

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corteva are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Corteva may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Noranda Aluminum and Corteva

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

The idea behind Noranda Aluminum Holding and Corteva 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.