Correlation Between AENA SME and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both AENA SME 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 AENA SME and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AENA SME UNSPADR110 and Norwegian Air Shuttle, you can compare the effects of market volatilities on AENA SME 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 AENA SME with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of AENA SME and Norwegian Air.
Diversification Opportunities for AENA SME and Norwegian Air
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between AENA and Norwegian is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding AENA SME UNSPADR110 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 AENA SME 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 AENA SME UNSPADR110 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 AENA SME i.e., AENA SME and Norwegian Air go up and down completely randomly.
Pair Corralation between AENA SME and Norwegian Air
Assuming the 90 days trading horizon AENA SME UNSPADR110 is expected to generate 0.55 times more return on investment than Norwegian Air. However, AENA SME UNSPADR110 is 1.81 times less risky than Norwegian Air. It trades about 0.04 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.02 per unit of risk. If you would invest 1,890 in AENA SME UNSPADR110 on September 22, 2024 and sell it today you would earn a total of 20.00 from holding AENA SME UNSPADR110 or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AENA SME UNSPADR110 vs. Norwegian Air Shuttle
Performance |
| Timeline |
| AENA SME UNSPADR110 |
| Norwegian Air Shuttle |
AENA SME and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AENA SME and Norwegian Air
The main advantage of trading using opposite AENA SME and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AENA SME 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.| AENA SME vs. Singapore Telecommunications Limited | AENA SME vs. United Internet AG | AENA SME vs. CN MODERN DAIRY | AENA SME vs. Charoen Pokphand Foods |
| Norwegian Air vs. Airports of Thailand | Norwegian Air vs. Airports of Thailand | Norwegian Air vs. Aena SME SA | Norwegian Air vs. AENA SME UNSPADR110 |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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