Correlation Between Ferrexpo PLC and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Ferrexpo PLC 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 Ferrexpo PLC and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrexpo PLC and Norwegian Air Shuttle, you can compare the effects of market volatilities on Ferrexpo PLC 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 Ferrexpo PLC with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and Norwegian Air.
Diversification Opportunities for Ferrexpo PLC and Norwegian Air
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ferrexpo and Norwegian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC 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 Ferrexpo PLC 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 Ferrexpo PLC 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 Ferrexpo PLC i.e., Ferrexpo PLC and Norwegian Air go up and down completely randomly.
Pair Corralation between Ferrexpo PLC and Norwegian Air
Assuming the 90 days trading horizon Ferrexpo PLC is expected to generate 2.41 times more return on investment than Norwegian Air. However, Ferrexpo PLC is 2.41 times more volatile than Norwegian Air Shuttle. It trades about 0.18 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.05 per unit of risk. If you would invest 7,680 in Ferrexpo PLC on October 28, 2024 and sell it today you would earn a total of 2,940 from holding Ferrexpo PLC or generate 38.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrexpo PLC vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Ferrexpo PLC |
| Norwegian Air Shuttle |
Ferrexpo PLC and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrexpo PLC and Norwegian Air
The main advantage of trading using opposite Ferrexpo PLC and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo PLC 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.| Ferrexpo PLC vs. Dentsply Sirona | Ferrexpo PLC vs. Zoom Video Communications | Ferrexpo PLC vs. Aeorema Communications Plc | Ferrexpo PLC vs. Electronic Arts |
| Norwegian Air vs. Sovereign Metals | Norwegian Air vs. Wheaton Precious Metals | Norwegian Air vs. Europa Metals | Norwegian Air vs. Live Nation Entertainment |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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