Correlation Between Empire Metals and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Empire Metals 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 Empire Metals and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Metals Limited and Norwegian Air Shuttle, you can compare the effects of market volatilities on Empire Metals 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 Empire Metals with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Norwegian Air.
Diversification Opportunities for Empire Metals and Norwegian Air
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and Norwegian is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited 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 Empire Metals 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 Empire Metals Limited 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 Empire Metals i.e., Empire Metals and Norwegian Air go up and down completely randomly.
Pair Corralation between Empire Metals and Norwegian Air
Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 1.64 times more return on investment than Norwegian Air. However, Empire Metals is 1.64 times more volatile than Norwegian Air Shuttle. It trades about 0.41 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.09 per unit of risk. If you would invest 710.00 in Empire Metals Limited on November 3, 2024 and sell it today you would earn a total of 255.00 from holding Empire Metals Limited or generate 35.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire Metals Limited vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Empire Metals Limited |
| Norwegian Air Shuttle |
Empire Metals and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Norwegian Air
The main advantage of trading using opposite Empire Metals and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals 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.| Empire Metals vs. Vitec Software Group | Empire Metals vs. Auction Technology Group | Empire Metals vs. Clean Power Hydrogen | Empire Metals vs. Systemair AB |
| Norwegian Air vs. Catena Media PLC | Norwegian Air vs. Tata Steel Limited | Norwegian Air vs. Baker Steel Resources | Norwegian Air vs. One Media iP |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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