Correlation Between Nokia Corp and Qualcomm Incorporated
Can any of the company-specific risk be diversified away by investing in both Nokia Corp and Qualcomm Incorporated 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 Nokia Corp and Qualcomm Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nokia Corp ADR and Qualcomm Incorporated, you can compare the effects of market volatilities on Nokia Corp and Qualcomm Incorporated 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 Nokia Corp with a short position of Qualcomm Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia Corp and Qualcomm Incorporated.
Diversification Opportunities for Nokia Corp and Qualcomm Incorporated
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nokia and Qualcomm is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nokia Corp ADR and Qualcomm Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualcomm Incorporated and Nokia Corp 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 Nokia Corp ADR are associated (or correlated) with Qualcomm Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualcomm Incorporated has no effect on the direction of Nokia Corp i.e., Nokia Corp and Qualcomm Incorporated go up and down completely randomly.
Pair Corralation between Nokia Corp and Qualcomm Incorporated
Considering the 90-day investment horizon Nokia Corp ADR is expected to generate 0.68 times more return on investment than Qualcomm Incorporated. However, Nokia Corp ADR is 1.47 times less risky than Qualcomm Incorporated. It trades about 0.22 of its potential returns per unit of risk. Qualcomm Incorporated is currently generating about 0.08 per unit of risk. If you would invest 344.00 in Nokia Corp ADR on February 7, 2024 and sell it today you would earn a total of 30.00 from holding Nokia Corp ADR or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nokia Corp ADR vs. Qualcomm Incorporated
Performance |
| Timeline |
| Nokia Corp ADR |
| Qualcomm Incorporated |
Nokia Corp and Qualcomm Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokia Corp and Qualcomm Incorporated
The main advantage of trading using opposite Nokia Corp and Qualcomm Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia Corp position performs unexpectedly, Qualcomm Incorporated 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 Qualcomm Incorporated will offset losses from the drop in Qualcomm Incorporated's long position.| Nokia Corp vs. Ciena Corp | Nokia Corp vs. Extreme Networks | Nokia Corp vs. Hewlett Packard Enterprise | Nokia Corp vs. NETGEAR |
| Qualcomm Incorporated vs. IF Bancorp | Qualcomm Incorporated vs. Merck Company | Qualcomm Incorporated vs. The Wendys Co | Qualcomm Incorporated vs. Infosys Ltd ADR |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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