Correlation Between Norwegian Cruise and Carnival Plc
Can any of the company-specific risk be diversified away by investing in both Norwegian Cruise and Carnival Plc 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 Norwegian Cruise and Carnival Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norwegian Cruise Line and Carnival plc, you can compare the effects of market volatilities on Norwegian Cruise and Carnival Plc 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 Norwegian Cruise with a short position of Carnival Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Cruise and Carnival Plc.
Diversification Opportunities for Norwegian Cruise and Carnival Plc
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Norwegian and Carnival is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Cruise Line and Carnival plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival plc and Norwegian Cruise 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 Norwegian Cruise Line are associated (or correlated) with Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival plc has no effect on the direction of Norwegian Cruise i.e., Norwegian Cruise and Carnival Plc go up and down completely randomly.
Pair Corralation between Norwegian Cruise and Carnival Plc
Assuming the 90 days trading horizon Norwegian Cruise Line is expected to generate 1.17 times more return on investment than Carnival Plc. However, Norwegian Cruise is 1.17 times more volatile than Carnival plc. It trades about 0.29 of its potential returns per unit of risk. Carnival plc is currently generating about 0.32 per unit of risk. If you would invest 13,888 in Norwegian Cruise Line on August 31, 2024 and sell it today you would earn a total of 2,112 from holding Norwegian Cruise Line or generate 15.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Norwegian Cruise Line vs. Carnival plc
Performance |
| Timeline |
| Norwegian Cruise Line |
| Carnival plc |
Norwegian Cruise and Carnival Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Cruise and Carnival Plc
The main advantage of trading using opposite Norwegian Cruise and Carnival Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Cruise position performs unexpectedly, Carnival Plc 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 Carnival Plc will offset losses from the drop in Carnival Plc's long position.| Norwegian Cruise vs. Apartment Investment and | Norwegian Cruise vs. G2D Investments | Norwegian Cruise vs. Charter Communications | Norwegian Cruise vs. Marfrig Global Foods |
| Carnival Plc vs. Charter Communications | Carnival Plc vs. Credit Acceptance | Carnival Plc vs. Lloyds Banking Group | Carnival Plc vs. Hospital Mater Dei |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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