Correlation Between Norwegian Air and Shelf Drilling
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Shelf Drilling 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 Shelf Drilling 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 Shelf Drilling, you can compare the effects of market volatilities on Norwegian Air and Shelf Drilling 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 Shelf Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Shelf Drilling.
Diversification Opportunities for Norwegian Air and Shelf Drilling
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norwegian and Shelf is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Shelf Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelf Drilling 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 Shelf Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelf Drilling has no effect on the direction of Norwegian Air i.e., Norwegian Air and Shelf Drilling go up and down completely randomly.
Pair Corralation between Norwegian Air and Shelf Drilling
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 0.47 times more return on investment than Shelf Drilling. However, Norwegian Air Shuttle is 2.13 times less risky than Shelf Drilling. It trades about 0.27 of its potential returns per unit of risk. Shelf Drilling is currently generating about -0.51 per unit of risk. If you would invest 987.00 in Norwegian Air Shuttle on August 29, 2024 and sell it today you would earn a total of 139.00 from holding Norwegian Air Shuttle or generate 14.08% 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. Shelf Drilling
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Shelf Drilling |
Norwegian Air and Shelf Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Shelf Drilling
The main advantage of trading using opposite Norwegian Air and Shelf Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Shelf Drilling 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 Shelf Drilling will offset losses from the drop in Shelf Drilling's long position.| Norwegian Air vs. Danske Bank AS | Norwegian Air vs. Kongsberg Automotive Holding | Norwegian Air vs. Nel ASA |
| Shelf Drilling vs. BW Offshore | Shelf Drilling vs. Elkem ASA | Shelf Drilling vs. Solstad Offsho | Shelf Drilling 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |