Correlation Between National Beverage and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Norwegian Air Shuttle, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Norwegian Air.
Diversification Opportunities for National Beverage and Norwegian Air
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Norwegian is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp 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 National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Norwegian Air go up and down completely randomly.
Pair Corralation between National Beverage and Norwegian Air
Assuming the 90 days trading horizon National Beverage Corp is expected to under-perform the Norwegian Air. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.69 times less risky than Norwegian Air. The stock trades about -0.42 of its potential returns per unit of risk. The Norwegian Air Shuttle is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 1,149 in Norwegian Air Shuttle on October 11, 2024 and sell it today you would lose (61.00) from holding Norwegian Air Shuttle or give up 5.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
National Beverage Corp vs. Norwegian Air Shuttle
Performance |
| Timeline |
| National Beverage Corp |
| Norwegian Air Shuttle |
National Beverage and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Norwegian Air
The main advantage of trading using opposite National Beverage and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.| National Beverage vs. Future Metals NL | National Beverage vs. Power Metal Resources | National Beverage vs. Zegona Communications Plc | National Beverage vs. Westlake Chemical Corp |
| Norwegian Air vs. Monster Beverage Corp | Norwegian Air vs. Premier Foods PLC | Norwegian Air vs. Ebro Foods | Norwegian Air vs. National Beverage Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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