Correlation Between Norwegian Air and Zaptec AS
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Zaptec AS 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 Zaptec AS 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 Zaptec AS, you can compare the effects of market volatilities on Norwegian Air and Zaptec AS 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 Zaptec AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Zaptec AS.
Diversification Opportunities for Norwegian Air and Zaptec AS
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norwegian and Zaptec is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Zaptec AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zaptec 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 Zaptec AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zaptec AS has no effect on the direction of Norwegian Air i.e., Norwegian Air and Zaptec AS go up and down completely randomly.
Pair Corralation between Norwegian Air and Zaptec AS
Assuming the 90 days trading horizon Norwegian Air is expected to generate 27.86 times less return on investment than Zaptec AS. But when comparing it to its historical volatility, Norwegian Air Shuttle is 1.54 times less risky than Zaptec AS. It trades about 0.02 of its potential returns per unit of risk. Zaptec AS is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,063 in Zaptec AS on November 9, 2024 and sell it today you would earn a total of 347.00 from holding Zaptec AS or generate 32.64% 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. Zaptec AS
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Zaptec AS |
Norwegian Air and Zaptec AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Zaptec AS
The main advantage of trading using opposite Norwegian Air and Zaptec AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Zaptec AS 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 Zaptec AS will offset losses from the drop in Zaptec AS's long position.| Norwegian Air vs. Danske Bank AS | Norwegian Air vs. Kongsberg Automotive Holding | Norwegian Air vs. Nel 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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