Correlation Between Norsk Hydro and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Norwegian Air 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 Norsk Hydro and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norsk Hydro ASA and Norwegian Air Shuttle, you can compare the effects of market volatilities on Norsk Hydro and Norwegian Air 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 Norsk Hydro with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Norwegian Air.
Diversification Opportunities for Norsk Hydro and Norwegian Air
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Norsk and Norwegian is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle and Norsk Hydro 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 Norsk Hydro ASA are associated (or correlated) with Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Norwegian Air go up and down completely randomly.
Pair Corralation between Norsk Hydro and Norwegian Air
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.09 times more return on investment than Norwegian Air. However, Norsk Hydro is 1.09 times more volatile than Norwegian Air Shuttle. It trades about 0.03 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.03 per unit of risk. If you would invest 404.00 in Norsk Hydro ASA on September 13, 2024 and sell it today you would earn a total of 168.00 from holding Norsk Hydro ASA or generate 41.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Norsk Hydro ASA |
| Norwegian Air Shuttle |
Norsk Hydro and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Norwegian Air
The main advantage of trading using opposite Norsk Hydro and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| Norsk Hydro vs. Goosehead Insurance | Norsk Hydro vs. RETAIL FOOD GROUP | Norsk Hydro vs. COSTCO WHOLESALE CDR | Norsk Hydro vs. SBI Insurance Group |
| Norwegian Air vs. Aena SME SA | Norwegian Air vs. Superior Plus Corp | Norwegian Air vs. SIVERS SEMICONDUCTORS AB | Norwegian Air vs. Norsk Hydro 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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