Correlation Between Global Net and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Global Net and Norwegian Air 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 Global Net and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Norwegian Air Shuttle, you can compare the effects of market volatilities on Global Net and Norwegian Air 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 Global Net with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Norwegian Air.
Diversification Opportunities for Global Net and Norwegian Air
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Norwegian is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle and Global Net 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 Global Net Lease are associated (or correlated) with Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of Global Net i.e., Global Net and Norwegian Air go up and down completely randomly.
Pair Corralation between Global Net and Norwegian Air
Assuming the 90 days trading horizon Global Net Lease is expected to generate 0.66 times more return on investment than Norwegian Air. However, Global Net Lease is 1.52 times less risky than Norwegian Air. It trades about 0.17 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.11 per unit of risk. If you would invest 688.00 in Global Net Lease on October 28, 2024 and sell it today you would earn a total of 35.00 from holding Global Net Lease or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Global Net Lease |
| Norwegian Air Shuttle |
Global Net and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Norwegian Air
The main advantage of trading using opposite Global Net and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| Global Net vs. Target Healthcare REIT | Global Net vs. Planet Fitness Cl | Global Net vs. CVS Health Corp | Global Net vs. DFS Furniture PLC |
| Norwegian Air vs. Sovereign Metals | Norwegian Air vs. Wheaton Precious Metals | Norwegian Air vs. Europa Metals | Norwegian Air vs. Live Nation Entertainment |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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