Correlation Between CATLIN GROUP and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP 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 CATLIN GROUP and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Norwegian Air Shuttle, you can compare the effects of market volatilities on CATLIN GROUP 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 CATLIN GROUP with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Norwegian Air.
Diversification Opportunities for CATLIN GROUP and Norwegian Air
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CATLIN and Norwegian is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP i.e., CATLIN GROUP and Norwegian Air go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Norwegian Air
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 1.36 times less return on investment than Norwegian Air. But when comparing it to its historical volatility, CATLIN GROUP is 1.7 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 0.03 of returns per unit of risk over similar time horizon. If you would invest 868.00 in Norwegian Air Shuttle on September 3, 2024 and sell it today you would earn a total of 250.00 from holding Norwegian Air Shuttle or generate 28.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. Norwegian Air Shuttle
Performance |
| Timeline |
| CATLIN GROUP |
| Norwegian Air Shuttle |
CATLIN GROUP and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Norwegian Air
The main advantage of trading using opposite CATLIN GROUP and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP 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.| CATLIN GROUP vs. Molson Coors Beverage | CATLIN GROUP vs. Flowtech Fluidpower plc | CATLIN GROUP vs. CleanTech Lithium plc | CATLIN GROUP vs. Monster Beverage Corp |
| Norwegian Air vs. Catalyst Media Group | Norwegian Air vs. CATLIN GROUP | Norwegian Air vs. Magnora ASA | Norwegian Air vs. RTW Venture Fund |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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