Correlation Between United Breweries and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both United Breweries 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 United Breweries and NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on United Breweries 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 United Breweries with a short position of NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and NORWEGIAN AIR.
Diversification Opportunities for United Breweries and NORWEGIAN AIR
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and NORWEGIAN is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co 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 United Breweries 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 United Breweries Co 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 United Breweries i.e., United Breweries and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between United Breweries and NORWEGIAN AIR
Assuming the 90 days trading horizon United Breweries Co is expected to generate 0.6 times more return on investment than NORWEGIAN AIR. However, United Breweries Co is 1.67 times less risky than NORWEGIAN AIR. It trades about 0.2 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about 0.08 per unit of risk. If you would invest 961.00 in United Breweries Co on October 1, 2024 and sell it today you would earn a total of 119.00 from holding United Breweries Co or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| United Breweries |
| NORWEGIAN AIR SHUT |
United Breweries and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and NORWEGIAN AIR
The main advantage of trading using opposite United Breweries and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries 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.| United Breweries vs. INDO RAMA SYNTHETIC | United Breweries vs. SEKISUI CHEMICAL | United Breweries vs. Mitsui Chemicals | United Breweries vs. GRUPO CARSO A1 |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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