Correlation Between Norwegian Air and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Golden Metal 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 Golden Metal 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 Golden Metal Resources, you can compare the effects of market volatilities on Norwegian Air and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Golden Metal.
Diversification Opportunities for Norwegian Air and Golden Metal
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norwegian and Golden is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Norwegian Air i.e., Norwegian Air and Golden Metal go up and down completely randomly.
Pair Corralation between Norwegian Air and Golden Metal
Assuming the 90 days trading horizon Norwegian Air is expected to generate 33.85 times less return on investment than Golden Metal. But when comparing it to its historical volatility, Norwegian Air Shuttle is 18.26 times less risky than Golden Metal. It trades about 0.03 of its potential returns per unit of risk. Golden Metal Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Golden Metal Resources on August 28, 2024 and sell it today you would earn a total of 3,291 from holding Golden Metal Resources or generate 36566.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.68% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Golden Metal Resources
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Golden Metal Resources |
Norwegian Air and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Golden Metal
The main advantage of trading using opposite Norwegian Air and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal'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 |
| Golden Metal vs. Regions Financial Corp | Golden Metal vs. Panther Metals PLC | Golden Metal vs. Adriatic Metals | Golden Metal vs. Ally Financial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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