Correlation Between Noranda Aluminum and Small Cap
Can any of the company-specific risk be diversified away by investing in both Noranda Aluminum and Small Cap 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 Small Cap 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 Small Cap Premium, you can compare the effects of market volatilities on Noranda Aluminum and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noranda Aluminum and Small Cap.
Diversification Opportunities for Noranda Aluminum and Small Cap
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Noranda and Small is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Noranda Aluminum Holding and Small Cap Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Premium 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Premium has no effect on the direction of Noranda Aluminum i.e., Noranda Aluminum and Small Cap go up and down completely randomly.
Pair Corralation between Noranda Aluminum and Small Cap
If you would invest 2,404 in Small Cap Premium on February 2, 2024 and sell it today you would earn a total of 40.00 from holding Small Cap Premium or generate 1.66% 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. Small Cap Premium
Performance |
Timeline |
Noranda Aluminum Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Small Cap Premium |
Noranda Aluminum and Small Cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Noranda Aluminum and Small Cap
The main advantage of trading using opposite Noranda Aluminum and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noranda Aluminum position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.Noranda Aluminum vs. Relx PLC ADR | Noranda Aluminum vs. Procter Gamble | Noranda Aluminum vs. Skechers USA | Noranda Aluminum vs. Scholastic |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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