Correlation Between Norse Atlantic and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Norse Atlantic 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 Norse Atlantic and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norse Atlantic ASA and Norwegian Air Shuttle, you can compare the effects of market volatilities on Norse Atlantic 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 Norse Atlantic with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norse Atlantic and Norwegian Air.
Diversification Opportunities for Norse Atlantic and Norwegian Air
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norse and Norwegian is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Norse Atlantic 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 Norse Atlantic 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 Norse Atlantic 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 Norse Atlantic i.e., Norse Atlantic and Norwegian Air go up and down completely randomly.
Pair Corralation between Norse Atlantic and Norwegian Air
Assuming the 90 days horizon Norse Atlantic ASA is expected to generate 1.27 times more return on investment than Norwegian Air. However, Norse Atlantic is 1.27 times more volatile than Norwegian Air Shuttle. It trades about 0.13 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.02 per unit of risk. If you would invest 21.00 in Norse Atlantic ASA on August 31, 2024 and sell it today you would earn a total of 13.00 from holding Norse Atlantic ASA or generate 61.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Norse Atlantic ASA vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Norse Atlantic ASA |
| Norwegian Air Shuttle |
Norse Atlantic and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norse Atlantic and Norwegian Air
The main advantage of trading using opposite Norse Atlantic and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norse Atlantic 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.| Norse Atlantic vs. Finnair Oyj | Norse Atlantic vs. easyJet plc | Norse Atlantic vs. Air New Zealand | Norse Atlantic vs. Air China Limited |
| Norwegian Air vs. Cebu Air | Norwegian Air vs. Air France KLM SA | Norwegian Air vs. easyJet plc | Norwegian Air vs. Norse Atlantic 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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