Correlation Between Norwegian Air and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Jacquet Metal 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 Jacquet Metal 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 Jacquet Metal Service, you can compare the effects of market volatilities on Norwegian Air and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Jacquet Metal.
Diversification Opportunities for Norwegian Air and Jacquet Metal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Norwegian and Jacquet is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Norwegian Air i.e., Norwegian Air and Jacquet Metal go up and down completely randomly.
Pair Corralation between Norwegian Air and Jacquet Metal
Assuming the 90 days horizon Norwegian Air Shuttle is expected to generate 2.03 times more return on investment than Jacquet Metal. However, Norwegian Air is 2.03 times more volatile than Jacquet Metal Service. It trades about 0.1 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.18 per unit of risk. If you would invest 88.00 in Norwegian Air Shuttle on August 31, 2024 and sell it today you would earn a total of 5.00 from holding Norwegian Air Shuttle or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Jacquet Metal Service
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Jacquet Metal Service |
Norwegian Air and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Jacquet Metal
The main advantage of trading using opposite Norwegian Air and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| Norwegian Air vs. United Natural Foods | Norwegian Air vs. Molson Coors Beverage | Norwegian Air vs. JJ SNACK FOODS | Norwegian Air vs. CN MODERN DAIRY |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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