Correlation Between Norwegian Air and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Lloyds Banking 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 Lloyds Banking 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 Lloyds Banking Group, you can compare the effects of market volatilities on Norwegian Air and Lloyds Banking 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 Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Lloyds Banking.
Diversification Opportunities for Norwegian Air and Lloyds Banking
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norwegian and Lloyds is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Lloyds Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lloyds Banking Group 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 Lloyds Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lloyds Banking Group has no effect on the direction of Norwegian Air i.e., Norwegian Air and Lloyds Banking go up and down completely randomly.
Pair Corralation between Norwegian Air and Lloyds Banking
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 5.94 times more return on investment than Lloyds Banking. However, Norwegian Air is 5.94 times more volatile than Lloyds Banking Group. It trades about 0.02 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about 0.05 per unit of risk. If you would invest 907.00 in Norwegian Air Shuttle on October 16, 2024 and sell it today you would earn a total of 93.00 from holding Norwegian Air Shuttle or generate 10.25% 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. Lloyds Banking Group
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Lloyds Banking Group |
Norwegian Air and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Lloyds Banking
The main advantage of trading using opposite Norwegian Air and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Lloyds Banking 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 Lloyds Banking will offset losses from the drop in Lloyds Banking's long position.| Norwegian Air vs. Zurich Insurance Group | Norwegian Air vs. Light Science Technologies | Norwegian Air vs. Playtech Plc | Norwegian Air vs. Ecclesiastical Insurance Office |
| Lloyds Banking vs. Norwegian Air Shuttle | Lloyds Banking vs. Pentair PLC | Lloyds Banking vs. AMG Advanced Metallurgical | Lloyds Banking vs. BW Offshore |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |