Correlation Between Air New and Norse Atlantic
Can any of the company-specific risk be diversified away by investing in both Air New and Norse Atlantic 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 Air New and Norse Atlantic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Norse Atlantic ASA, you can compare the effects of market volatilities on Air New and Norse Atlantic 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 Air New with a short position of Norse Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Norse Atlantic.
Diversification Opportunities for Air New and Norse Atlantic
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Norse is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Norse Atlantic ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norse Atlantic ASA and Air New 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 Air New Zealand are associated (or correlated) with Norse Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norse Atlantic ASA has no effect on the direction of Air New i.e., Air New and Norse Atlantic go up and down completely randomly.
Pair Corralation between Air New and Norse Atlantic
Assuming the 90 days horizon Air New is expected to generate 1.61 times less return on investment than Norse Atlantic. But when comparing it to its historical volatility, Air New Zealand is 3.95 times less risky than Norse Atlantic. It trades about 0.28 of its potential returns per unit of risk. Norse Atlantic ASA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Norse Atlantic ASA on October 20, 2024 and sell it today you would earn a total of 2.00 from holding Norse Atlantic ASA or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Air New Zealand vs. Norse Atlantic ASA
Performance |
| Timeline |
| Air New Zealand |
| Norse Atlantic ASA |
Air New and Norse Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Norse Atlantic
The main advantage of trading using opposite Air New and Norse Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Norse Atlantic 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 Norse Atlantic will offset losses from the drop in Norse Atlantic's long position.| Air New vs. AirAsia Group Berhad | Air New vs. ANA Holdings ADR | Air New vs. Cebu Air | Air New vs. Air France KLM SA |
| Norse Atlantic vs. Finnair Oyj | Norse Atlantic vs. easyJet plc | Norse Atlantic vs. Air New Zealand | Norse Atlantic vs. Air China Limited |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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