Correlation Between Ebro Foods and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Ebro Foods 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 Ebro Foods and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Norwegian Air Shuttle, you can compare the effects of market volatilities on Ebro Foods 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 Ebro Foods with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Norwegian Air.
Diversification Opportunities for Ebro Foods and Norwegian Air
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ebro and Norwegian is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods 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 Ebro Foods 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 Ebro Foods 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 Ebro Foods i.e., Ebro Foods and Norwegian Air go up and down completely randomly.
Pair Corralation between Ebro Foods and Norwegian Air
Assuming the 90 days trading horizon Ebro Foods is expected to generate 2.09 times less return on investment than Norwegian Air. But when comparing it to its historical volatility, Ebro Foods is 3.67 times less risky than Norwegian Air. It trades about 0.03 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,060 in Norwegian Air Shuttle on August 25, 2024 and sell it today you would earn a total of 29.00 from holding Norwegian Air Shuttle or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Ebro Foods |
| Norwegian Air Shuttle |
Ebro Foods and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Norwegian Air
The main advantage of trading using opposite Ebro Foods and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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.| Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Hyundai Motor | Ebro Foods vs. Toyota Motor Corp |
| Norwegian Air vs. Samsung Electronics Co | Norwegian Air vs. Samsung Electronics Co | Norwegian Air vs. Hyundai Motor | Norwegian Air vs. Toyota Motor 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |