Correlation Between Uniper SE and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Uniper SE 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 Uniper SE and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uniper SE and Norwegian Air Shuttle, you can compare the effects of market volatilities on Uniper SE 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 Uniper SE with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniper SE and Norwegian Air.
Diversification Opportunities for Uniper SE and Norwegian Air
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Uniper and Norwegian is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Uniper SE 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 Uniper SE 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 Uniper SE 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 Uniper SE i.e., Uniper SE and Norwegian Air go up and down completely randomly.
Pair Corralation between Uniper SE and Norwegian Air
Assuming the 90 days trading horizon Uniper SE is expected to under-perform the Norwegian Air. In addition to that, Uniper SE is 1.02 times more volatile than Norwegian Air Shuttle. It trades about -0.09 of its total potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.07 per unit of volatility. If you would invest 1,123 in Norwegian Air Shuttle on September 24, 2024 and sell it today you would lose (36.00) from holding Norwegian Air Shuttle or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uniper SE vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Uniper SE |
| Norwegian Air Shuttle |
Uniper SE and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniper SE and Norwegian Air
The main advantage of trading using opposite Uniper SE and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniper SE 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.| Uniper SE vs. Mulberry Group PLC | Uniper SE vs. London Security Plc | Uniper SE vs. Triad Group PLC | Uniper SE vs. SURETRACK MON |
| Norwegian Air vs. Uniper SE | Norwegian Air vs. Mulberry Group PLC | Norwegian Air vs. London Security Plc | Norwegian Air vs. Triad Group PLC |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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