Correlation Between Norwegian Air and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Norwegian Air and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Litigation Capital.
Diversification Opportunities for Norwegian Air and Litigation Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norwegian and Litigation is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Norwegian Air i.e., Norwegian Air and Litigation Capital go up and down completely randomly.
Pair Corralation between Norwegian Air and Litigation Capital
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 2.39 times more return on investment than Litigation Capital. However, Norwegian Air is 2.39 times more volatile than Litigation Capital Management. It trades about 0.31 of its potential returns per unit of risk. Litigation Capital Management is currently generating about 0.18 per unit of risk. If you would invest 987.00 in Norwegian Air Shuttle on August 29, 2024 and sell it today you would earn a total of 152.00 from holding Norwegian Air Shuttle or generate 15.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Litigation Capital Management
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Litigation Capital |
Norwegian Air and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Litigation Capital
The main advantage of trading using opposite Norwegian Air and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| Norwegian Air vs. Lendinvest PLC | Norwegian Air vs. Neometals | Norwegian Air vs. Coor Service Management | Norwegian Air vs. Albion Technology General |
| Litigation Capital vs. Toyota Motor Corp | Litigation Capital vs. Lendinvest PLC | Litigation Capital vs. Neometals | Litigation Capital vs. Coor Service Management |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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