Correlation Between EHEALTH and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both EHEALTH 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 EHEALTH and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EHEALTH and Norwegian Air Shuttle, you can compare the effects of market volatilities on EHEALTH 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 EHEALTH with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of EHEALTH and Norwegian Air.
Diversification Opportunities for EHEALTH and Norwegian Air
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EHEALTH and Norwegian is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding EHEALTH 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 EHEALTH 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 EHEALTH 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 EHEALTH i.e., EHEALTH and Norwegian Air go up and down completely randomly.
Pair Corralation between EHEALTH and Norwegian Air
Assuming the 90 days trading horizon EHEALTH is expected to generate 1.24 times more return on investment than Norwegian Air. However, EHEALTH is 1.24 times more volatile than Norwegian Air Shuttle. It trades about 0.02 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 486.00 in EHEALTH on September 3, 2024 and sell it today you would earn a total of 9.00 from holding EHEALTH or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EHEALTH vs. Norwegian Air Shuttle
Performance |
| Timeline |
| EHEALTH |
| Norwegian Air Shuttle |
EHEALTH and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EHEALTH and Norwegian Air
The main advantage of trading using opposite EHEALTH and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EHEALTH 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 EHEALTH 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. SHIP HEALTHCARE HLDGINC | Norwegian Air vs. GALENA MINING LTD | Norwegian Air vs. Tianjin Capital Environmental | Norwegian Air vs. BlueScope Steel Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |