Correlation Between Norwegian Air and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Southern Copper 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 Southern Copper 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 Southern Copper Corp, you can compare the effects of market volatilities on Norwegian Air and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Southern Copper.
Diversification Opportunities for Norwegian Air and Southern Copper
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norwegian and Southern is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper Corp has no effect on the direction of Norwegian Air i.e., Norwegian Air and Southern Copper go up and down completely randomly.
Pair Corralation between Norwegian Air and Southern Copper
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to under-perform the Southern Copper. In addition to that, Norwegian Air is 1.29 times more volatile than Southern Copper Corp. It trades about -0.04 of its total potential returns per unit of risk. Southern Copper Corp is currently generating about -0.05 per unit of volatility. If you would invest 11,628 in Southern Copper Corp on September 24, 2024 and sell it today you would lose (2,431) from holding Southern Copper Corp or give up 20.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.41% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Southern Copper Corp
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Southern Copper Corp |
Norwegian Air and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Southern Copper
The main advantage of trading using opposite Norwegian Air and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Norwegian Air vs. Uniper SE | Norwegian Air vs. Mulberry Group PLC | Norwegian Air vs. London Security Plc | Norwegian Air vs. Triad Group PLC |
| Southern Copper vs. Uniper SE | Southern Copper vs. Mulberry Group PLC | Southern Copper vs. London Security Plc | Southern Copper vs. Triad Group PLC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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