Correlation Between Norwegian Air and NEXANS ADR
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and NEXANS ADR 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 NEXANS ADR 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 NEXANS ADR EO, you can compare the effects of market volatilities on Norwegian Air and NEXANS ADR 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 NEXANS ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and NEXANS ADR.
Diversification Opportunities for Norwegian Air and NEXANS ADR
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Norwegian and NEXANS is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and NEXANS ADR EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXANS ADR EO 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 NEXANS ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXANS ADR EO has no effect on the direction of Norwegian Air i.e., Norwegian Air and NEXANS ADR go up and down completely randomly.
Pair Corralation between Norwegian Air and NEXANS ADR
Assuming the 90 days horizon Norwegian Air Shuttle is expected to generate 0.91 times more return on investment than NEXANS ADR. However, Norwegian Air Shuttle is 1.1 times less risky than NEXANS ADR. It trades about -0.15 of its potential returns per unit of risk. NEXANS ADR EO is currently generating about -0.14 per unit of risk. If you would invest 99.00 in Norwegian Air Shuttle on October 10, 2024 and sell it today you would lose (5.00) from holding Norwegian Air Shuttle or give up 5.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. NEXANS ADR EO
Performance |
| Timeline |
| Norwegian Air Shuttle |
| NEXANS ADR EO |
Norwegian Air and NEXANS ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and NEXANS ADR
The main advantage of trading using opposite Norwegian Air and NEXANS ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, NEXANS ADR 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 NEXANS ADR will offset losses from the drop in NEXANS ADR's long position.| Norwegian Air vs. Corporate Office Properties | Norwegian Air vs. Aedas Homes SA | Norwegian Air vs. Flutter Entertainment PLC | Norwegian Air vs. REMEDY ENTERTAINMENT OYJ |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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