Correlation Between Norwegian Air and Bien Sparebank
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Bien Sparebank 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 Air and Bien Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norwegian Air Shuttle and Bien Sparebank ASA, you can compare the effects of market volatilities on Norwegian Air and Bien Sparebank 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 Air with a short position of Bien Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Bien Sparebank.
Diversification Opportunities for Norwegian Air and Bien Sparebank
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Norwegian and Bien is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Bien Sparebank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bien Sparebank ASA and Norwegian Air 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 Air Shuttle are associated (or correlated) with Bien Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bien Sparebank ASA has no effect on the direction of Norwegian Air i.e., Norwegian Air and Bien Sparebank go up and down completely randomly.
Pair Corralation between Norwegian Air and Bien Sparebank
Assuming the 90 days trading horizon Norwegian Air is expected to generate 1.7 times less return on investment than Bien Sparebank. In addition to that, Norwegian Air is 2.07 times more volatile than Bien Sparebank ASA. It trades about 0.03 of its total potential returns per unit of risk. Bien Sparebank ASA is currently generating about 0.09 per unit of volatility. If you would invest 8,178 in Bien Sparebank ASA on September 12, 2024 and sell it today you would earn a total of 4,222 from holding Bien Sparebank ASA or generate 51.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Bien Sparebank ASA
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Bien Sparebank ASA |
Norwegian Air and Bien Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Bien Sparebank
The main advantage of trading using opposite Norwegian Air and Bien Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Bien Sparebank 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 Bien Sparebank will offset losses from the drop in Bien Sparebank's long position.| Norwegian Air vs. Danske Bank AS | Norwegian Air vs. Kongsberg Automotive Holding | Norwegian Air vs. Kongsberg Gruppen ASA | Norwegian Air vs. Napatech AS |
| Bien Sparebank vs. Lea Bank ASA | Bien Sparebank vs. Romerike Sparebank | Bien Sparebank vs. Kongsberg Gruppen ASA | Bien Sparebank vs. Napatech AS |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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