Correlation Between United States and NTG Nordic

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both United States and NTG Nordic 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 United States and NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and NTG Nordic Transport, you can compare the effects of market volatilities on United States and NTG Nordic 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 United States with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and NTG Nordic.

Diversification Opportunities for United States and NTG Nordic

UnitedNTGDiversified AwayUnitedNTGDiversified Away100%
0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between United and NTG is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and United States 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 United States Steel are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of United States i.e., United States and NTG Nordic go up and down completely randomly.

Pair Corralation between United States and NTG Nordic

Assuming the 90 days trading horizon United States Steel is expected to generate 2.2 times more return on investment than NTG Nordic. However, United States is 2.2 times more volatile than NTG Nordic Transport. It trades about -0.01 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.22 per unit of risk. If you would invest  3,311  in United States Steel on October 15, 2024 and sell it today you would lose (130.00) from holding United States Steel or give up 3.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

United States Steel  vs.  NTG Nordic Transport

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10-50510152025
JavaScript chart by amCharts 3.21.15USX1 NRSA
       Timeline  
United States Steel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United States is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan28303234363840
NTG Nordic Transport 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan3334353637383940

United States and NTG Nordic Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.83-7.36-4.9-2.430.04172.55.07.510.0 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15USX1 NRSA
       Returns  

Pair Trading with United States and NTG Nordic

The main advantage of trading using opposite United States and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.
The idea behind United States Steel and NTG Nordic Transport 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

Other Complementary Tools

Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Equity Valuation
Check real value of public entities based on technical and fundamental data
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators