Correlation Between NORWEGIAN AIR and Abbott Laboratories
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and Abbott Laboratories 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 Abbott Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORWEGIAN AIR SHUT and Abbott Laboratories, you can compare the effects of market volatilities on NORWEGIAN AIR and Abbott Laboratories 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 Abbott Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and Abbott Laboratories.
Diversification Opportunities for NORWEGIAN AIR and Abbott Laboratories
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between NORWEGIAN and Abbott is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories 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 SHUT are associated (or correlated) with Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Abbott Laboratories go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and Abbott Laboratories
Assuming the 90 days trading horizon NORWEGIAN AIR is expected to generate 1.67 times less return on investment than Abbott Laboratories. In addition to that, NORWEGIAN AIR is 2.6 times more volatile than Abbott Laboratories. It trades about 0.01 of its total potential returns per unit of risk. Abbott Laboratories is currently generating about 0.05 per unit of volatility. If you would invest 9,585 in Abbott Laboratories on November 6, 2024 and sell it today you would earn a total of 2,845 from holding Abbott Laboratories or generate 29.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORWEGIAN AIR SHUT vs. Abbott Laboratories
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| Abbott Laboratories |
NORWEGIAN AIR and Abbott Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and Abbott Laboratories
The main advantage of trading using opposite NORWEGIAN AIR and Abbott Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, Abbott Laboratories 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 Abbott Laboratories will offset losses from the drop in Abbott Laboratories' long position.| NORWEGIAN AIR vs. Scandinavian Tobacco Group | NORWEGIAN AIR vs. HK Electric Investments | NORWEGIAN AIR vs. Western Copper and | NORWEGIAN AIR vs. AOYAMA TRADING |
| Abbott Laboratories vs. USWE SPORTS AB | Abbott Laboratories vs. BW OFFSHORE LTD | Abbott Laboratories vs. Easy Software AG | Abbott Laboratories vs. ATOSS SOFTWARE |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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