Correlation Between Norwegian Air and Impax Environmental
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Impax Environmental 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 Impax Environmental 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 Impax Environmental Markets, you can compare the effects of market volatilities on Norwegian Air and Impax Environmental 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 Impax Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Impax Environmental.
Diversification Opportunities for Norwegian Air and Impax Environmental
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Norwegian and Impax is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Impax Environmental Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Environmental 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 Impax Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Environmental has no effect on the direction of Norwegian Air i.e., Norwegian Air and Impax Environmental go up and down completely randomly.
Pair Corralation between Norwegian Air and Impax Environmental
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 2.8 times more return on investment than Impax Environmental. However, Norwegian Air is 2.8 times more volatile than Impax Environmental Markets. It trades about 0.0 of its potential returns per unit of risk. Impax Environmental Markets is currently generating about -0.02 per unit of risk. If you would invest 1,255 in Norwegian Air Shuttle on September 2, 2024 and sell it today you would lose (137.00) from holding Norwegian Air Shuttle or give up 10.92% 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. Impax Environmental Markets
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Impax Environmental |
Norwegian Air and Impax Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Impax Environmental
The main advantage of trading using opposite Norwegian Air and Impax Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Impax Environmental 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 Impax Environmental will offset losses from the drop in Impax Environmental's long position.| Norwegian Air vs. Check Point Software | Norwegian Air vs. European Metals Holdings | Norwegian Air vs. New Residential Investment | Norwegian Air vs. The Mercantile Investment |
| Impax Environmental vs. Toyota Motor Corp | Impax Environmental vs. SoftBank Group Corp | Impax Environmental vs. OTP Bank Nyrt | Impax Environmental vs. Las Vegas Sands |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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