Correlation Between Norwegian Air and River
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and River 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 River 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 River and Mercantile, you can compare the effects of market volatilities on Norwegian Air and River 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 River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and River.
Diversification Opportunities for Norwegian Air and River
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norwegian and River is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and River and Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River and Mercantile 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 River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River and Mercantile has no effect on the direction of Norwegian Air i.e., Norwegian Air and River go up and down completely randomly.
Pair Corralation between Norwegian Air and River
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 2.45 times more return on investment than River. However, Norwegian Air is 2.45 times more volatile than River and Mercantile. It trades about 0.03 of its potential returns per unit of risk. River and Mercantile is currently generating about 0.03 per unit of risk. If you would invest 868.00 in Norwegian Air Shuttle on September 3, 2024 and sell it today you would earn a total of 250.00 from holding Norwegian Air Shuttle or generate 28.8% 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. River and Mercantile
Performance |
| Timeline |
| Norwegian Air Shuttle |
| River and Mercantile |
Norwegian Air and River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and River
The main advantage of trading using opposite Norwegian Air and River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, River 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 River will offset losses from the drop in River's long position.| Norwegian Air vs. Catalyst Media Group | Norwegian Air vs. CATLIN GROUP | Norwegian Air vs. RTW Venture Fund | Norwegian Air vs. Secure Property Development |
| River vs. SMA Solar Technology | River vs. DXC Technology Co | River vs. Raytheon Technologies Corp | River vs. Grieg Seafood |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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