Correlation Between NORWEGIAN AIR and AIR LIQUIDE
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and AIR LIQUIDE 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 AIR LIQUIDE 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 AIR LIQUIDE ADR, you can compare the effects of market volatilities on NORWEGIAN AIR and AIR LIQUIDE 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 AIR LIQUIDE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and AIR LIQUIDE.
Diversification Opportunities for NORWEGIAN AIR and AIR LIQUIDE
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NORWEGIAN and AIR is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and AIR LIQUIDE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR LIQUIDE ADR 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 AIR LIQUIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR LIQUIDE ADR has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and AIR LIQUIDE go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and AIR LIQUIDE
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to under-perform the AIR LIQUIDE. In addition to that, NORWEGIAN AIR is 2.66 times more volatile than AIR LIQUIDE ADR. It trades about -0.03 of its total potential returns per unit of risk. AIR LIQUIDE ADR is currently generating about -0.03 per unit of volatility. If you would invest 3,100 in AIR LIQUIDE ADR on September 22, 2024 and sell it today you would lose (20.00) from holding AIR LIQUIDE ADR or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORWEGIAN AIR SHUT vs. AIR LIQUIDE ADR
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| AIR LIQUIDE ADR |
NORWEGIAN AIR and AIR LIQUIDE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and AIR LIQUIDE
The main advantage of trading using opposite NORWEGIAN AIR and AIR LIQUIDE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, AIR LIQUIDE 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 AIR LIQUIDE will offset losses from the drop in AIR LIQUIDE's long position.| NORWEGIAN AIR vs. Fukuyama Transporting Co | NORWEGIAN AIR vs. QUEEN S ROAD | NORWEGIAN AIR vs. COPLAND ROAD CAPITAL | NORWEGIAN AIR vs. TEXAS ROADHOUSE |
| AIR LIQUIDE vs. Cleanaway Waste Management | AIR LIQUIDE vs. GREENX METALS LTD | AIR LIQUIDE vs. AGF Management Limited | AIR LIQUIDE vs. Brockhaus Capital Management |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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