Correlation Between SWISS WATER and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both SWISS WATER 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 SWISS WATER and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and Norwegian Air Shuttle, you can compare the effects of market volatilities on SWISS WATER 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 SWISS WATER with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and Norwegian Air.
Diversification Opportunities for SWISS WATER and Norwegian Air
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between SWISS and Norwegian is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE 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 SWISS WATER 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 SWISS WATER DECAFFCOFFEE 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 SWISS WATER i.e., SWISS WATER and Norwegian Air go up and down completely randomly.
Pair Corralation between SWISS WATER and Norwegian Air
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to generate 0.7 times more return on investment than Norwegian Air. However, SWISS WATER DECAFFCOFFEE is 1.43 times less risky than Norwegian Air. It trades about 0.05 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.03 per unit of risk. If you would invest 264.00 in SWISS WATER DECAFFCOFFEE on August 25, 2024 and sell it today you would earn a total of 6.00 from holding SWISS WATER DECAFFCOFFEE or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. Norwegian Air Shuttle
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| Norwegian Air Shuttle |
SWISS WATER and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and Norwegian Air
The main advantage of trading using opposite SWISS WATER and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER 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.| SWISS WATER vs. Superior Plus Corp | SWISS WATER vs. NMI Holdings | SWISS WATER vs. Origin Agritech | SWISS WATER vs. SIVERS SEMICONDUCTORS AB |
| Norwegian Air vs. Airports of Thailand | Norwegian Air vs. Airports of Thailand | Norwegian Air vs. Aena SME SA | Norwegian Air vs. AerCap Holdings NV |
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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