Correlation Between Dolphin Drilling and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Dolphin Drilling 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 Dolphin Drilling and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dolphin Drilling AS and Norwegian Air Shuttle, you can compare the effects of market volatilities on Dolphin Drilling 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 Dolphin Drilling with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolphin Drilling and Norwegian Air.
Diversification Opportunities for Dolphin Drilling and Norwegian Air
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dolphin and Norwegian is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Drilling AS 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 Dolphin Drilling 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 Dolphin Drilling AS 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 Dolphin Drilling i.e., Dolphin Drilling and Norwegian Air go up and down completely randomly.
Pair Corralation between Dolphin Drilling and Norwegian Air
Assuming the 90 days trading horizon Dolphin Drilling AS is expected to under-perform the Norwegian Air. In addition to that, Dolphin Drilling is 1.5 times more volatile than Norwegian Air Shuttle. It trades about -0.09 of its total potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.15 per unit of volatility. If you would invest 1,044 in Norwegian Air Shuttle on August 31, 2024 and sell it today you would earn a total of 81.00 from holding Norwegian Air Shuttle or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dolphin Drilling AS vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Dolphin Drilling |
| Norwegian Air Shuttle |
Dolphin Drilling and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dolphin Drilling and Norwegian Air
The main advantage of trading using opposite Dolphin Drilling and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolphin Drilling 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.| Dolphin Drilling vs. Shelf Drilling | Dolphin Drilling vs. BW Offshore | Dolphin Drilling vs. Subsea 7 SA | Dolphin Drilling vs. Elkem ASA |
| Norwegian Air vs. Danske Bank AS | Norwegian Air vs. Kongsberg Automotive Holding | Norwegian Air vs. Nel ASA |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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