Correlation Between Norwegian Air and Seven West
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Seven West 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 Seven West 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 Seven West Media, you can compare the effects of market volatilities on Norwegian Air and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Seven West.
Diversification Opportunities for Norwegian Air and Seven West
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norwegian and Seven is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Norwegian Air i.e., Norwegian Air and Seven West go up and down completely randomly.
Pair Corralation between Norwegian Air and Seven West
Assuming the 90 days horizon Norwegian Air is expected to generate 1.26 times less return on investment than Seven West. But when comparing it to its historical volatility, Norwegian Air Shuttle is 1.59 times less risky than Seven West. It trades about 0.03 of its potential returns per unit of risk. Seven West Media is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8.95 in Seven West Media on November 7, 2024 and sell it today you would lose (0.10) from holding Seven West Media or give up 1.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norwegian Air Shuttle vs. Seven West Media
Performance |
| Timeline |
| Norwegian Air Shuttle |
| Seven West Media |
Norwegian Air and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norwegian Air and Seven West
The main advantage of trading using opposite Norwegian Air and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West's long position.| Norwegian Air vs. ANTA SPORTS PRODUCT | Norwegian Air vs. DICKS Sporting Goods | Norwegian Air vs. Yuexiu Transport Infrastructure | Norwegian Air vs. Motorcar Parts of |
| Seven West vs. GALENA MINING LTD | Seven West vs. WisdomTree Investments | Seven West vs. ADRIATIC METALS LS 013355 | Seven West vs. Calibre Mining Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |