Correlation Between Norwegian Air and Alliance Data
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Alliance Data 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 Norwegian Air and Alliance Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norwegian Air Shuttle and Alliance Data Systems, you can compare the effects of market volatilities on Norwegian Air and Alliance Data 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 Norwegian Air with a short position of Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Alliance Data.
Diversification Opportunities for Norwegian Air and Alliance Data
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norwegian and Alliance is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems and Norwegian Air 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 Norwegian Air Shuttle are associated (or correlated) with Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of Norwegian Air i.e., Norwegian Air and Alliance Data go up and down completely randomly.
Pair Corralation between Norwegian Air and Alliance Data
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 0.9 times more return on investment than Alliance Data. However, Norwegian Air Shuttle is 1.11 times less risky than Alliance Data. It trades about -0.21 of its potential returns per unit of risk. Alliance Data Systems is currently generating about -0.46 per unit of risk. If you would invest 1,136 in Norwegian Air Shuttle on October 13, 2024 and sell it today you would lose (74.00) from holding Norwegian Air Shuttle or give up 6.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.21% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Alliance Data Systems
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Alliance Data Systems |
Norwegian Air and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Alliance Data
The main advantage of trading using opposite Norwegian Air and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Alliance Data 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 Alliance Data will offset losses from the drop in Alliance Data's long position.| Norwegian Air vs. Walmart | Norwegian Air vs. BYD Co | Norwegian Air vs. Volkswagen AG | Norwegian Air vs. Volkswagen AG Non Vtg |
| Alliance Data vs. Sealed Air Corp | Alliance Data vs. Medical Properties Trust | Alliance Data vs. Wizz Air Holdings | Alliance Data vs. Norwegian Air Shuttle |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |