Correlation Between Norwegian Air and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Reinsurance Group 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 Reinsurance Group 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 Reinsurance Group of, you can compare the effects of market volatilities on Norwegian Air and Reinsurance Group 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 Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Reinsurance Group.
Diversification Opportunities for Norwegian Air and Reinsurance Group
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Norwegian and Reinsurance is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Norwegian Air i.e., Norwegian Air and Reinsurance Group go up and down completely randomly.
Pair Corralation between Norwegian Air and Reinsurance Group
Assuming the 90 days horizon Norwegian Air Shuttle is expected to under-perform the Reinsurance Group. In addition to that, Norwegian Air is 1.77 times more volatile than Reinsurance Group of. It trades about -0.03 of its total potential returns per unit of risk. Reinsurance Group of is currently generating about 0.17 per unit of volatility. If you would invest 21,200 in Reinsurance Group of on November 7, 2024 and sell it today you would earn a total of 1,000.00 from holding Reinsurance Group of or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Reinsurance Group of
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Reinsurance Group |
Norwegian Air and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Reinsurance Group
The main advantage of trading using opposite Norwegian Air and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| Norwegian Air vs. Scottish Mortgage Investment | Norwegian Air vs. Guangdong Investment Limited | Norwegian Air vs. SENECA FOODS A | Norwegian Air vs. Austevoll Seafood ASA |
| Reinsurance Group vs. USWE SPORTS AB | Reinsurance Group vs. JD SPORTS FASH | Reinsurance Group vs. NEWELL RUBBERMAID | Reinsurance Group vs. Materialise NV |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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