Correlation Between Norwegian Air and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Veolia Environnement 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 Veolia Environnement 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 Veolia Environnement VE, you can compare the effects of market volatilities on Norwegian Air and Veolia Environnement 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 Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Veolia Environnement.
Diversification Opportunities for Norwegian Air and Veolia Environnement
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norwegian and Veolia is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement 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 Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Norwegian Air i.e., Norwegian Air and Veolia Environnement go up and down completely randomly.
Pair Corralation between Norwegian Air and Veolia Environnement
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 2.71 times more return on investment than Veolia Environnement. However, Norwegian Air is 2.71 times more volatile than Veolia Environnement VE. It trades about -0.04 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.21 per unit of risk. If you would invest 1,136 in Norwegian Air Shuttle on August 25, 2024 and sell it today you would lose (47.00) from holding Norwegian Air Shuttle or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Veolia Environnement VE
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Veolia Environnement |
Norwegian Air and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Veolia Environnement
The main advantage of trading using opposite Norwegian Air and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement'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 |
| Veolia Environnement vs. Samsung Electronics Co | Veolia Environnement vs. Samsung Electronics Co | Veolia Environnement vs. Hyundai Motor | Veolia Environnement vs. Toyota Motor Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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