Correlation Between Norwegian Air and Systemair
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Systemair 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 Systemair 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 Systemair AB, you can compare the effects of market volatilities on Norwegian Air and Systemair 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 Systemair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Systemair.
Diversification Opportunities for Norwegian Air and Systemair
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norwegian and Systemair is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB 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 Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of Norwegian Air i.e., Norwegian Air and Systemair go up and down completely randomly.
Pair Corralation between Norwegian Air and Systemair
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to under-perform the Systemair. In addition to that, Norwegian Air is 1.52 times more volatile than Systemair AB. It trades about -0.01 of its total potential returns per unit of risk. Systemair AB is currently generating about 0.07 per unit of volatility. If you would invest 7,367 in Systemair AB on August 28, 2024 and sell it today you would earn a total of 1,993 from holding Systemair AB or generate 27.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.06% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Systemair AB
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Systemair AB |
Norwegian Air and Systemair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Systemair
The main advantage of trading using opposite Norwegian Air and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Systemair 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 Systemair will offset losses from the drop in Systemair's long position.| Norwegian Air vs. Samsung Electronics Co | Norwegian Air vs. Samsung Electronics Co | Norwegian Air vs. Hyundai Motor | Norwegian Air vs. Toyota Motor Corp |
| Systemair vs. Cornish Metals | Systemair vs. GoldMining | Systemair vs. GreenX Metals | Systemair vs. Leroy Seafood Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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