Correlation Between Norwegian Air and Hershey
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Hershey 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 Hershey 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 Hershey Co, you can compare the effects of market volatilities on Norwegian Air and Hershey 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 Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Hershey.
Diversification Opportunities for Norwegian Air and Hershey
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norwegian and Hershey is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey 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 Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Norwegian Air i.e., Norwegian Air and Hershey go up and down completely randomly.
Pair Corralation between Norwegian Air and Hershey
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 1.36 times more return on investment than Hershey. However, Norwegian Air is 1.36 times more volatile than Hershey Co. It trades about -0.18 of its potential returns per unit of risk. Hershey Co is currently generating about -0.52 per unit of risk. If you would invest 1,127 in Norwegian Air Shuttle on October 14, 2024 and sell it today you would lose (65.00) from holding Norwegian Air Shuttle or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Hershey Co
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Hershey |
Norwegian Air and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Hershey
The main advantage of trading using opposite Norwegian Air and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Hershey 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 Hershey will offset losses from the drop in Hershey's long position.| Norwegian Air vs. Herald Investment Trust | Norwegian Air vs. Global Net Lease | Norwegian Air vs. FC Investment Trust | Norwegian Air vs. TBC Bank Group |
| Hershey vs. Ryanair Holdings plc | Hershey vs. Tyson Foods Cl | Hershey vs. Sligro Food Group | Hershey 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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