Correlation Between AEON STORES and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both AEON STORES 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 AEON STORES and NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEON STORES and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on AEON STORES 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 AEON STORES with a short position of NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON STORES and NORWEGIAN AIR.
Diversification Opportunities for AEON STORES and NORWEGIAN AIR
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AEON and NORWEGIAN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT and AEON STORES 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 AEON STORES 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 SHUT has no effect on the direction of AEON STORES i.e., AEON STORES and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between AEON STORES and NORWEGIAN AIR
Assuming the 90 days trading horizon AEON STORES is expected to under-perform the NORWEGIAN AIR. In addition to that, AEON STORES is 1.09 times more volatile than NORWEGIAN AIR SHUT. It trades about -0.01 of its total potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about 0.03 per unit of volatility. If you would invest 87.00 in NORWEGIAN AIR SHUT on September 12, 2024 and sell it today you would earn a total of 11.00 from holding NORWEGIAN AIR SHUT or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEON STORES vs. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| AEON STORES |
| NORWEGIAN AIR SHUT |
AEON STORES and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEON STORES and NORWEGIAN AIR
The main advantage of trading using opposite AEON STORES and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEON STORES 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.| AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc |
| NORWEGIAN AIR vs. Meiko Electronics Co | NORWEGIAN AIR vs. UET United Electronic | NORWEGIAN AIR vs. BURLINGTON STORES | NORWEGIAN AIR vs. AEON STORES |
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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