Correlation Between Superior Plus and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Norwegian Air Shuttle, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Norwegian Air.
Diversification Opportunities for Superior Plus and Norwegian Air
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Superior and Norwegian is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus 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 Superior Plus 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 Superior Plus 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 Superior Plus i.e., Superior Plus and Norwegian Air go up and down completely randomly.
Pair Corralation between Superior Plus and Norwegian Air
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Norwegian Air. In addition to that, Superior Plus is 1.75 times more volatile than Norwegian Air Shuttle. It trades about -0.01 of its total potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.19 per unit of volatility. If you would invest 85.00 in Norwegian Air Shuttle on August 29, 2024 and sell it today you would earn a total of 10.00 from holding Norwegian Air Shuttle or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Superior Plus Corp |
| Norwegian Air Shuttle |
Superior Plus and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Norwegian Air
The main advantage of trading using opposite Superior Plus and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. Meli Hotels International | Superior Plus vs. InterContinental Hotels Group | Superior Plus vs. PT Bank Maybank | Superior Plus vs. Pebblebrook Hotel Trust |
| Norwegian Air vs. Aena SME SA | Norwegian Air vs. Superior Plus Corp | Norwegian Air vs. NMI Holdings | Norwegian Air vs. SIVERS SEMICONDUCTORS AB |
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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