Correlation Between Fair Isaac and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Fair Isaac 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 Fair Isaac and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Isaac Corp and Norwegian Air Shuttle, you can compare the effects of market volatilities on Fair Isaac 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 Fair Isaac with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and Norwegian Air.
Diversification Opportunities for Fair Isaac and Norwegian Air
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fair and Norwegian is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac Corp 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 Fair Isaac 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 Fair Isaac Corp 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 Fair Isaac i.e., Fair Isaac and Norwegian Air go up and down completely randomly.
Pair Corralation between Fair Isaac and Norwegian Air
Assuming the 90 days trading horizon Fair Isaac Corp is expected to generate 0.88 times more return on investment than Norwegian Air. However, Fair Isaac Corp is 1.13 times less risky than Norwegian Air. It trades about 0.37 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.18 per unit of risk. If you would invest 184,050 in Fair Isaac Corp on September 1, 2024 and sell it today you would earn a total of 42,450 from holding Fair Isaac Corp or generate 23.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fair Isaac Corp vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Fair Isaac Corp |
| Norwegian Air Shuttle |
Fair Isaac and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Isaac and Norwegian Air
The main advantage of trading using opposite Fair Isaac and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Isaac 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 Fair Isaac Corp 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. NTG Nordic Transport | Norwegian Air vs. MINCO SILVER | Norwegian Air vs. Ming Le Sports | Norwegian Air vs. Sporttotal AG |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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