Correlation Between Norwegian Air and Napatech
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Napatech 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 Napatech 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 Napatech AS, you can compare the effects of market volatilities on Norwegian Air and Napatech 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 Napatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Napatech.
Diversification Opportunities for Norwegian Air and Napatech
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norwegian and Napatech is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Napatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Napatech AS 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 Napatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Napatech AS has no effect on the direction of Norwegian Air i.e., Norwegian Air and Napatech go up and down completely randomly.
Pair Corralation between Norwegian Air and Napatech
Assuming the 90 days trading horizon Norwegian Air is expected to generate 1.45 times less return on investment than Napatech. But when comparing it to its historical volatility, Norwegian Air Shuttle is 1.24 times less risky than Napatech. It trades about 0.04 of its potential returns per unit of risk. Napatech AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,340 in Napatech AS on August 28, 2024 and sell it today you would earn a total of 910.00 from holding Napatech AS or generate 67.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Napatech AS
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Napatech AS |
Norwegian Air and Napatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Napatech
The main advantage of trading using opposite Norwegian Air and Napatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Napatech 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 Napatech will offset losses from the drop in Napatech's long position.| Norwegian Air vs. Danske Bank AS | Norwegian Air vs. Kongsberg Automotive Holding | Norwegian Air vs. Nel ASA |
| Napatech vs. Idex ASA | Napatech vs. Next Biometrics Group | Napatech vs. Polight ASA | Napatech vs. Kitron 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |