Correlation Between NISSAN CHEMICAL and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL 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 NISSAN CHEMICAL and NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NISSAN CHEMICAL IND and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on NISSAN CHEMICAL 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 NISSAN CHEMICAL with a short position of NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and NORWEGIAN AIR.
Diversification Opportunities for NISSAN CHEMICAL and NORWEGIAN AIR
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NISSAN and NORWEGIAN is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT and NISSAN CHEMICAL 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 NISSAN CHEMICAL IND 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 SHUT has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between NISSAN CHEMICAL and NORWEGIAN AIR
Assuming the 90 days trading horizon NISSAN CHEMICAL is expected to generate 1.46 times less return on investment than NORWEGIAN AIR. But when comparing it to its historical volatility, NISSAN CHEMICAL IND is 2.45 times less risky than NORWEGIAN AIR. It trades about 0.23 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 88.00 in NORWEGIAN AIR SHUT on September 2, 2024 and sell it today you would earn a total of 7.00 from holding NORWEGIAN AIR SHUT or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NISSAN CHEMICAL IND vs. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| NISSAN CHEMICAL IND |
| NORWEGIAN AIR SHUT |
NISSAN CHEMICAL and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NISSAN CHEMICAL and NORWEGIAN AIR
The main advantage of trading using opposite NISSAN CHEMICAL and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL 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.The idea behind NISSAN CHEMICAL IND and NORWEGIAN AIR SHUT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| NORWEGIAN AIR vs. SIVERS SEMICONDUCTORS AB | NORWEGIAN AIR vs. Darden Restaurants | NORWEGIAN AIR vs. Reliance Steel Aluminum | NORWEGIAN AIR vs. Q2M Managementberatung AG |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |