Correlation Between Norwegian Air and Global Net
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on Norwegian Air and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Global Net.
Diversification Opportunities for Norwegian Air and Global Net
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norwegian and Global is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Norwegian Air i.e., Norwegian Air and Global Net go up and down completely randomly.
Pair Corralation between Norwegian Air and Global Net
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 0.52 times more return on investment than Global Net. However, Norwegian Air Shuttle is 1.91 times less risky than Global Net. It trades about 0.03 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.01 per unit of risk. If you would invest 868.00 in Norwegian Air Shuttle on September 3, 2024 and sell it today you would earn a total of 250.00 from holding Norwegian Air Shuttle or generate 28.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.58% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Global Net Lease
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Global Net Lease |
Norwegian Air and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Global Net
The main advantage of trading using opposite Norwegian Air and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Norwegian Air vs. Catalyst Media Group | Norwegian Air vs. CATLIN GROUP | Norwegian Air vs. RTW Venture Fund | Norwegian Air vs. Secure Property Development |
| Global Net vs. Catalyst Media Group | Global Net vs. CATLIN GROUP | Global Net vs. RTW Venture Fund | Global Net vs. Secure Property Development |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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