Correlation Between Norwegian Air and Transportadora
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on Norwegian Air and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Transportadora.
Diversification Opportunities for Norwegian Air and Transportadora
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norwegian and Transportadora is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Norwegian Air i.e., Norwegian Air and Transportadora go up and down completely randomly.
Pair Corralation between Norwegian Air and Transportadora
Assuming the 90 days horizon Norwegian Air Shuttle is expected to under-perform the Transportadora. But the stock apears to be less risky and, when comparing its historical volatility, Norwegian Air Shuttle is 1.35 times less risky than Transportadora. The stock trades about -0.01 of its potential returns per unit of risk. The Transportadora de Gas is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,900 in Transportadora de Gas on August 25, 2024 and sell it today you would earn a total of 740.00 from holding Transportadora de Gas or generate 38.95% 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. Transportadora de Gas
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Transportadora de Gas |
Norwegian Air and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Transportadora
The main advantage of trading using opposite Norwegian Air and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Norwegian Air vs. AUST AGRICULTURAL | Norwegian Air vs. TITAN MACHINERY | Norwegian Air vs. Federal Agricultural Mortgage | Norwegian Air vs. Hitachi Construction Machinery |
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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 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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