Correlation Between Data Modul and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Data Modul 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 Data Modul and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Data Modul AG and Norwegian Air Shuttle, you can compare the effects of market volatilities on Data Modul 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 Data Modul with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data Modul and Norwegian Air.
Diversification Opportunities for Data Modul and Norwegian Air
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Data and Norwegian is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Data Modul AG 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 Data Modul 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 Data Modul AG 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 Data Modul i.e., Data Modul and Norwegian Air go up and down completely randomly.
Pair Corralation between Data Modul and Norwegian Air
Assuming the 90 days trading horizon Data Modul AG is expected to under-perform the Norwegian Air. But the stock apears to be less risky and, when comparing its historical volatility, Data Modul AG is 1.52 times less risky than Norwegian Air. The stock trades about -0.06 of its potential returns per unit of risk. The Norwegian Air Shuttle is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 77.00 in Norwegian Air Shuttle on October 11, 2024 and sell it today you would earn a total of 17.00 from holding Norwegian Air Shuttle or generate 22.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Data Modul AG vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Data Modul AG |
| Norwegian Air Shuttle |
Data Modul and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Data Modul and Norwegian Air
The main advantage of trading using opposite Data Modul and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data Modul 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.The idea behind Data Modul AG and Norwegian Air Shuttle pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Norwegian Air vs. Data Modul AG | Norwegian Air vs. CN DATANG C | Norwegian Air vs. SCANSOURCE | Norwegian Air vs. Cass Information Systems |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |