Correlation Between Norwegian Air and North Energy
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and North Energy 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 North Energy 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 North Energy ASA, you can compare the effects of market volatilities on Norwegian Air and North Energy 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 North Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and North Energy.
Diversification Opportunities for Norwegian Air and North Energy
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Norwegian and North is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy 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 North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Norwegian Air i.e., Norwegian Air and North Energy go up and down completely randomly.
Pair Corralation between Norwegian Air and North Energy
Assuming the 90 days trading horizon Norwegian Air is expected to generate 2.49 times less return on investment than North Energy. But when comparing it to its historical volatility, Norwegian Air Shuttle is 1.02 times less risky than North Energy. It trades about 0.02 of its potential returns per unit of risk. North Energy ASA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 263.00 in North Energy ASA on November 9, 2024 and sell it today you would earn a total of 5.00 from holding North Energy ASA or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. North Energy ASA
Performance |
| Timeline |
| Norwegian Air Shuttle |
| North Energy ASA |
Norwegian Air and North Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and North Energy
The main advantage of trading using opposite Norwegian Air and North Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, North Energy 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 North Energy will offset losses from the drop in North Energy's long position.| Norwegian Air vs. Danske Bank AS | Norwegian Air vs. Kongsberg Automotive Holding | Norwegian Air vs. Nel ASA |
| North Energy vs. Melhus Sparebank | North Energy vs. Sparebank 1 SMN | North Energy vs. Sunndal Sparebank | North Energy vs. Arcticzymes Technologies 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 CEOs Directory module to screen CEOs from public companies around the world.
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