Correlation Between Norwegian Air and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on Norwegian Air and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Merit Medical.
Diversification Opportunities for Norwegian Air and Merit Medical
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norwegian and Merit is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Norwegian Air i.e., Norwegian Air and Merit Medical go up and down completely randomly.
Pair Corralation between Norwegian Air and Merit Medical
Assuming the 90 days horizon Norwegian Air Shuttle is expected to generate 1.95 times more return on investment than Merit Medical. However, Norwegian Air is 1.95 times more volatile than Merit Medical Systems. It trades about 0.03 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.06 per unit of risk. If you would invest 75.00 in Norwegian Air Shuttle on September 14, 2024 and sell it today you would earn a total of 22.00 from holding Norwegian Air Shuttle or generate 29.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Merit Medical Systems
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Merit Medical Systems |
Norwegian Air and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Merit Medical
The main advantage of trading using opposite Norwegian Air and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Norwegian Air vs. Aena SME SA | Norwegian Air vs. Superior Plus Corp | Norwegian Air vs. SIVERS SEMICONDUCTORS AB | Norwegian Air vs. Norsk Hydro ASA |
| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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