Correlation Between NORWEGIAN AIR and ALERION CLEANPOWER
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER, you can compare the effects of market volatilities on NORWEGIAN AIR and ALERION CLEANPOWER 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 ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and ALERION CLEANPOWER.
Diversification Opportunities for NORWEGIAN AIR and ALERION CLEANPOWER
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NORWEGIAN and ALERION is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER 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 ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and ALERION CLEANPOWER go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and ALERION CLEANPOWER
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 1.54 times more return on investment than ALERION CLEANPOWER. However, NORWEGIAN AIR is 1.54 times more volatile than ALERION CLEANPOWER. It trades about -0.06 of its potential returns per unit of risk. ALERION CLEANPOWER is currently generating about -0.27 per unit of risk. If you would invest 94.00 in NORWEGIAN AIR SHUT on November 7, 2024 and sell it today you would lose (3.00) from holding NORWEGIAN AIR SHUT or give up 3.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NORWEGIAN AIR SHUT vs. ALERION CLEANPOWER
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| ALERION CLEANPOWER |
NORWEGIAN AIR and ALERION CLEANPOWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and ALERION CLEANPOWER
The main advantage of trading using opposite NORWEGIAN AIR and ALERION CLEANPOWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, ALERION CLEANPOWER 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 ALERION CLEANPOWER will offset losses from the drop in ALERION CLEANPOWER's long position.| NORWEGIAN AIR vs. Gladstone Investment | NORWEGIAN AIR vs. CHRYSALIS INVESTMENTS LTD | NORWEGIAN AIR vs. MGIC INVESTMENT | NORWEGIAN AIR vs. Lattice Semiconductor |
| ALERION CLEANPOWER vs. BE Semiconductor Industries | ALERION CLEANPOWER vs. Magnachip Semiconductor | ALERION CLEANPOWER vs. MUTUIONLINE | ALERION CLEANPOWER vs. Semiconductor Manufacturing International |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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