Correlation Between Norwegian Air and DS Smith
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and DS Smith 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 DS Smith 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 DS Smith PLC, you can compare the effects of market volatilities on Norwegian Air and DS Smith 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 DS Smith. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and DS Smith.
Diversification Opportunities for Norwegian Air and DS Smith
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Norwegian and SMDS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and DS Smith PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DS Smith PLC 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 DS Smith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DS Smith PLC has no effect on the direction of Norwegian Air i.e., Norwegian Air and DS Smith go up and down completely randomly.
Pair Corralation between Norwegian Air and DS Smith
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to under-perform the DS Smith. In addition to that, Norwegian Air is 1.46 times more volatile than DS Smith PLC. It trades about -0.04 of its total potential returns per unit of risk. DS Smith PLC is currently generating about 0.14 per unit of volatility. If you would invest 36,823 in DS Smith PLC on November 28, 2024 and sell it today you would earn a total of 21,427 from holding DS Smith PLC or generate 58.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 92.02% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. DS Smith PLC
Performance |
| Timeline |
| Norwegian Air Shuttle |
| DS Smith PLC |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Norwegian Air and DS Smith Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and DS Smith
The main advantage of trading using opposite Norwegian Air and DS Smith positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, DS Smith 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 DS Smith will offset losses from the drop in DS Smith's long position.| Norwegian Air vs. G5 Entertainment AB | Norwegian Air vs. Hollywood Bowl Group | Norwegian Air vs. Team Internet Group | Norwegian Air vs. Bigblu Broadband PLC |
| DS Smith vs. Eastinco Mining Exploration | DS Smith vs. Critical Metals Plc | DS Smith vs. Atalaya Mining | DS Smith vs. First Class Metals |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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