Correlation Between Freeport McMoRan and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan 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 Freeport McMoRan and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Norwegian Air Shuttle, you can compare the effects of market volatilities on Freeport McMoRan 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 Freeport McMoRan with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Norwegian Air.
Diversification Opportunities for Freeport McMoRan and Norwegian Air
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Freeport and Norwegian is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan i.e., Freeport McMoRan and Norwegian Air go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Norwegian Air
Assuming the 90 days trading horizon Freeport McMoRan is expected to under-perform the Norwegian Air. In addition to that, Freeport McMoRan is 1.14 times more volatile than Norwegian Air Shuttle. It trades about -0.23 of its total potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.17 per unit of volatility. 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freeport McMoRan vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Freeport McMoRan |
| Norwegian Air Shuttle |
Freeport McMoRan and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Norwegian Air
The main advantage of trading using opposite Freeport McMoRan and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan 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.| Freeport McMoRan vs. Norwegian Air Shuttle | Freeport McMoRan vs. Ryanair Holdings plc | Freeport McMoRan vs. Lindsell Train Investment | Freeport McMoRan vs. Wizz Air Holdings |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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