Correlation Between Norwegian Air and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Synthomer Plc 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 Synthomer Plc 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 Synthomer plc, you can compare the effects of market volatilities on Norwegian Air and Synthomer Plc 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 Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Synthomer Plc.
Diversification Opportunities for Norwegian Air and Synthomer Plc
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Norwegian and Synthomer is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer 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 Synthomer Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthomer plc has no effect on the direction of Norwegian Air i.e., Norwegian Air and Synthomer Plc go up and down completely randomly.
Pair Corralation between Norwegian Air and Synthomer Plc
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 0.65 times more return on investment than Synthomer Plc. However, Norwegian Air Shuttle is 1.54 times less risky than Synthomer Plc. It trades about 0.0 of its potential returns per unit of risk. Synthomer plc is currently generating about -0.06 per unit of risk. If you would invest 1,273 in Norwegian Air Shuttle on September 19, 2024 and sell it today you would lose (161.00) from holding Norwegian Air Shuttle or give up 12.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Synthomer plc
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Synthomer plc |
Norwegian Air and Synthomer Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Synthomer Plc
The main advantage of trading using opposite Norwegian Air and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Synthomer Plc 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 Synthomer Plc will offset losses from the drop in Synthomer Plc's long position.| Norwegian Air vs. Monster Beverage Corp | Norwegian Air vs. Gear4music Plc | Norwegian Air vs. Regions Financial Corp | Norwegian Air vs. Royal Bank of |
| Synthomer Plc vs. MT Bank Corp | Synthomer Plc vs. Cembra Money Bank | Synthomer Plc vs. National Bank of | Synthomer Plc vs. Norwegian Air Shuttle |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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