Correlation Between Norwegian Air and Universal Display
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Universal Display 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 Universal Display 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 Universal Display Corp, you can compare the effects of market volatilities on Norwegian Air and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Universal Display.
Diversification Opportunities for Norwegian Air and Universal Display
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norwegian and Universal is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Universal Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display Corp has no effect on the direction of Norwegian Air i.e., Norwegian Air and Universal Display go up and down completely randomly.
Pair Corralation between Norwegian Air and Universal Display
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 1.06 times more return on investment than Universal Display. However, Norwegian Air is 1.06 times more volatile than Universal Display Corp. It trades about 0.01 of its potential returns per unit of risk. Universal Display Corp is currently generating about -0.02 per unit of risk. If you would invest 1,099 in Norwegian Air Shuttle on November 1, 2024 and sell it today you would lose (2.00) from holding Norwegian Air Shuttle or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Universal Display Corp
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Universal Display Corp |
Norwegian Air and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Universal Display
The main advantage of trading using opposite Norwegian Air and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.| Norwegian Air vs. Catalyst Media Group | Norwegian Air vs. MediaZest plc | Norwegian Air vs. Beowulf Mining | Norwegian Air vs. AcadeMedia AB |
| Universal Display vs. Berkshire Hathaway | Universal Display vs. Samsung Electronics Co | Universal Display vs. Samsung Electronics Co | Universal Display vs. Chocoladefabriken Lindt Spruengli |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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