Correlation Between Norwegian Air and FEMALE HEALTH
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and FEMALE HEALTH 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 FEMALE HEALTH 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 FEMALE HEALTH, you can compare the effects of market volatilities on Norwegian Air and FEMALE HEALTH 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 FEMALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and FEMALE HEALTH.
Diversification Opportunities for Norwegian Air and FEMALE HEALTH
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Norwegian and FEMALE is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH 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 FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of Norwegian Air i.e., Norwegian Air and FEMALE HEALTH go up and down completely randomly.
Pair Corralation between Norwegian Air and FEMALE HEALTH
Assuming the 90 days horizon Norwegian Air Shuttle is expected to under-perform the FEMALE HEALTH. But the stock apears to be less risky and, when comparing its historical volatility, Norwegian Air Shuttle is 1.22 times less risky than FEMALE HEALTH. The stock trades about -0.05 of its potential returns per unit of risk. The FEMALE HEALTH is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 92.00 in FEMALE HEALTH on September 3, 2024 and sell it today you would lose (25.00) from holding FEMALE HEALTH or give up 27.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. FEMALE HEALTH
Performance |
| Timeline |
| Norwegian Air Shuttle |
| FEMALE HEALTH |
Norwegian Air and FEMALE HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and FEMALE HEALTH
The main advantage of trading using opposite Norwegian Air and FEMALE HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, FEMALE HEALTH 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 FEMALE HEALTH will offset losses from the drop in FEMALE HEALTH's long position.| Norwegian Air vs. SHIP HEALTHCARE HLDGINC | Norwegian Air vs. GALENA MINING LTD | Norwegian Air vs. Tianjin Capital Environmental | Norwegian Air vs. BlueScope Steel Limited |
| FEMALE HEALTH vs. Universal Display | FEMALE HEALTH vs. SALESFORCE INC CDR | FEMALE HEALTH vs. Entravision Communications | FEMALE HEALTH vs. ULTRA CLEAN HLDGS |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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