Correlation Between Norwegian Cruise and Arcelormittal
Can any of the company-specific risk be diversified away by investing in both Norwegian Cruise and Arcelormittal 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 Cruise and Arcelormittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norwegian Cruise Line and Arcelormittal, you can compare the effects of market volatilities on Norwegian Cruise and Arcelormittal 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 Cruise with a short position of Arcelormittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Cruise and Arcelormittal.
Diversification Opportunities for Norwegian Cruise and Arcelormittal
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Norwegian and Arcelormittal is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Cruise Line and Arcelormittal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcelormittal and Norwegian Cruise 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 Cruise Line are associated (or correlated) with Arcelormittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcelormittal has no effect on the direction of Norwegian Cruise i.e., Norwegian Cruise and Arcelormittal go up and down completely randomly.
Pair Corralation between Norwegian Cruise and Arcelormittal
Given the investment horizon of 90 days Norwegian Cruise Line is expected to generate 1.44 times more return on investment than Arcelormittal. However, Norwegian Cruise is 1.44 times more volatile than Arcelormittal. It trades about 0.07 of its potential returns per unit of risk. Arcelormittal is currently generating about -0.21 per unit of risk. If you would invest 1,426 in Norwegian Cruise Line on August 30, 2024 and sell it today you would earn a total of 1,266 from holding Norwegian Cruise Line or generate 88.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 2.28% |
| Values | Daily Returns |
Norwegian Cruise Line vs. Arcelormittal
Performance |
| Timeline |
| Norwegian Cruise Line |
| Arcelormittal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Norwegian Cruise and Arcelormittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Cruise and Arcelormittal
The main advantage of trading using opposite Norwegian Cruise and Arcelormittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Cruise position performs unexpectedly, Arcelormittal 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 Arcelormittal will offset losses from the drop in Arcelormittal's long position.| Norwegian Cruise vs. Carnival | Norwegian Cruise vs. Airbnb Inc | Norwegian Cruise vs. Expedia Group | Norwegian Cruise vs. Booking Holdings |
| Arcelormittal vs. Affiliated Managers Group | Arcelormittal vs. Maiden Holdings North | Arcelormittal vs. Credit Enhanced Corts | Arcelormittal vs. Affiliated Managers Group, |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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