Correlation Between Norwegian Air and Nidaros Sparebank
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Nidaros 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 Nidaros 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 Nidaros Sparebank, you can compare the effects of market volatilities on Norwegian Air and Nidaros 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 Nidaros Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Nidaros Sparebank.
Diversification Opportunities for Norwegian Air and Nidaros Sparebank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Norwegian and Nidaros is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Nidaros Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidaros Sparebank 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 Nidaros Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidaros Sparebank has no effect on the direction of Norwegian Air i.e., Norwegian Air and Nidaros Sparebank go up and down completely randomly.
Pair Corralation between Norwegian Air and Nidaros Sparebank
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 5.12 times more return on investment than Nidaros Sparebank. However, Norwegian Air is 5.12 times more volatile than Nidaros Sparebank. It trades about 0.28 of its potential returns per unit of risk. Nidaros Sparebank is currently generating about -0.36 per unit of risk. If you would invest 987.00 in Norwegian Air Shuttle on August 28, 2024 and sell it today you would earn a total of 142.00 from holding Norwegian Air Shuttle or generate 14.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Nidaros Sparebank
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Nidaros Sparebank |
Norwegian Air and Nidaros Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Nidaros Sparebank
The main advantage of trading using opposite Norwegian Air and Nidaros Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Nidaros 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 Nidaros Sparebank will offset losses from the drop in Nidaros Sparebank's long position.| Norwegian Air vs. Danske Bank AS | Norwegian Air vs. Kongsberg Automotive Holding | Norwegian Air vs. Nel ASA |
| Nidaros Sparebank vs. DnB ASA | Nidaros Sparebank vs. Sparebank 1 SR | Nidaros Sparebank vs. Sparebank 1 SMN | Nidaros Sparebank vs. Sparebanken Mre |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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