Correlation Between Norwegian Air and Delta Air
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Delta Air 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 Delta Air 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 Delta Air Lines, you can compare the effects of market volatilities on Norwegian Air and Delta Air 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 Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Delta Air.
Diversification Opportunities for Norwegian Air and Delta Air
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norwegian and Delta is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines 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 Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Norwegian Air i.e., Norwegian Air and Delta Air go up and down completely randomly.
Pair Corralation between Norwegian Air and Delta Air
Assuming the 90 days trading horizon Norwegian Air is expected to generate 1.14 times less return on investment than Delta Air. But when comparing it to its historical volatility, Norwegian Air Shuttle is 1.06 times less risky than Delta Air. It trades about 0.16 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5,880 in Delta Air Lines on August 31, 2024 and sell it today you would earn a total of 492.00 from holding Delta Air Lines or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Delta Air Lines
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Delta Air Lines |
Norwegian Air and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Delta Air
The main advantage of trading using opposite Norwegian Air and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air's long position.| Norwegian Air vs. Axfood AB | Norwegian Air vs. United Internet AG | Norwegian Air vs. Ebro Foods | Norwegian Air vs. Associated British Foods |
| Delta Air vs. Darden Restaurants | Delta Air vs. Jacquet Metal Service | Delta Air vs. AMG Advanced Metallurgical | Delta Air vs. Elmos Semiconductor SE |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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