Correlation Between NORWEGIAN AIR and AMAG AUSTRIA
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and AMAG AUSTRIA 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 AMAG AUSTRIA 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 AMAG AUSTRIA M, you can compare the effects of market volatilities on NORWEGIAN AIR and AMAG AUSTRIA 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 AMAG AUSTRIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and AMAG AUSTRIA.
Diversification Opportunities for NORWEGIAN AIR and AMAG AUSTRIA
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NORWEGIAN and AMAG is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and AMAG AUSTRIA M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAG AUSTRIA M 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 AMAG AUSTRIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAG AUSTRIA M has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and AMAG AUSTRIA go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and AMAG AUSTRIA
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 2.72 times more return on investment than AMAG AUSTRIA. However, NORWEGIAN AIR is 2.72 times more volatile than AMAG AUSTRIA M. It trades about 0.19 of its potential returns per unit of risk. AMAG AUSTRIA M is currently generating about -0.32 per unit of risk. If you would invest 87.00 in NORWEGIAN AIR SHUT on August 31, 2024 and sell it today you would earn a total of 10.00 from holding NORWEGIAN AIR SHUT or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORWEGIAN AIR SHUT vs. AMAG AUSTRIA M
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| AMAG AUSTRIA M |
NORWEGIAN AIR and AMAG AUSTRIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and AMAG AUSTRIA
The main advantage of trading using opposite NORWEGIAN AIR and AMAG AUSTRIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, AMAG AUSTRIA 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 AMAG AUSTRIA will offset losses from the drop in AMAG AUSTRIA's long position.| NORWEGIAN AIR vs. SIVERS SEMICONDUCTORS AB | NORWEGIAN AIR vs. Darden Restaurants | NORWEGIAN AIR vs. Reliance Steel Aluminum | NORWEGIAN AIR vs. Q2M Managementberatung AG |
| AMAG AUSTRIA vs. SIVERS SEMICONDUCTORS AB | AMAG AUSTRIA vs. Darden Restaurants | AMAG AUSTRIA vs. Reliance Steel Aluminum | AMAG AUSTRIA vs. Q2M Managementberatung AG |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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