Correlation Between Merit Medical and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Merit Medical 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 Merit Medical and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and Norwegian Air Shuttle, you can compare the effects of market volatilities on Merit Medical 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 Merit Medical with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Norwegian Air.
Diversification Opportunities for Merit Medical and Norwegian Air
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and Norwegian is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems 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 Merit Medical 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 Merit Medical Systems 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 Merit Medical i.e., Merit Medical and Norwegian Air go up and down completely randomly.
Pair Corralation between Merit Medical and Norwegian Air
Assuming the 90 days trading horizon Merit Medical is expected to generate 3.54 times less return on investment than Norwegian Air. But when comparing it to its historical volatility, Merit Medical Systems is 1.67 times less risky than Norwegian Air. It trades about 0.06 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Norwegian Air Shuttle on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Norwegian Air Shuttle or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Merit Medical Systems |
| Norwegian Air Shuttle |
Merit Medical and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Norwegian Air
The main advantage of trading using opposite Merit Medical and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical 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.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
| Norwegian Air vs. Aena SME SA | Norwegian Air vs. Superior Plus Corp | Norwegian Air vs. SIVERS SEMICONDUCTORS AB | Norwegian Air vs. Norsk Hydro 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Stocks Directory Find actively traded stocks across global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |