Correlation Between Norwegian Air and Fair Isaac
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Fair Isaac 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 Fair Isaac 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 Fair Isaac Corp, you can compare the effects of market volatilities on Norwegian Air and Fair Isaac 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 Fair Isaac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Fair Isaac.
Diversification Opportunities for Norwegian Air and Fair Isaac
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norwegian and Fair is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Fair Isaac Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac Corp 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 Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac Corp has no effect on the direction of Norwegian Air i.e., Norwegian Air and Fair Isaac go up and down completely randomly.
Pair Corralation between Norwegian Air and Fair Isaac
Assuming the 90 days horizon Norwegian Air is expected to generate 1.58 times less return on investment than Fair Isaac. In addition to that, Norwegian Air is 1.11 times more volatile than Fair Isaac Corp. It trades about 0.19 of its total potential returns per unit of risk. Fair Isaac Corp is currently generating about 0.33 per unit of volatility. If you would invest 186,950 in Fair Isaac Corp on August 29, 2024 and sell it today you would earn a total of 39,250 from holding Fair Isaac Corp or generate 20.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Fair Isaac Corp
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Fair Isaac Corp |
Norwegian Air and Fair Isaac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Fair Isaac
The main advantage of trading using opposite Norwegian Air and Fair Isaac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Fair Isaac 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 Fair Isaac will offset losses from the drop in Fair Isaac's long position.| Norwegian Air vs. Aena SME SA | Norwegian Air vs. Superior Plus Corp | Norwegian Air vs. NMI Holdings | Norwegian Air vs. SIVERS SEMICONDUCTORS AB |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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