Correlation Between NORWEGIAN AIR and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and REVO INSURANCE 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 REVO INSURANCE 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 REVO INSURANCE SPA, you can compare the effects of market volatilities on NORWEGIAN AIR and REVO INSURANCE 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 REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and REVO INSURANCE.
Diversification Opportunities for NORWEGIAN AIR and REVO INSURANCE
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NORWEGIAN and REVO is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA 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 REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and REVO INSURANCE go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and REVO INSURANCE
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to under-perform the REVO INSURANCE. But the stock apears to be less risky and, when comparing its historical volatility, NORWEGIAN AIR SHUT is 1.42 times less risky than REVO INSURANCE. The stock trades about -0.07 of its potential returns per unit of risk. The REVO INSURANCE SPA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,165 in REVO INSURANCE SPA on October 26, 2024 and sell it today you would lose (20.00) from holding REVO INSURANCE SPA or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORWEGIAN AIR SHUT vs. REVO INSURANCE SPA
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| REVO INSURANCE SPA |
NORWEGIAN AIR and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and REVO INSURANCE
The main advantage of trading using opposite NORWEGIAN AIR and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, REVO INSURANCE 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE's long position.| NORWEGIAN AIR vs. MeVis Medical Solutions | NORWEGIAN AIR vs. IMAGIN MEDICAL INC | NORWEGIAN AIR vs. Sims Metal Management | NORWEGIAN AIR vs. Cleanaway Waste Management |
| REVO INSURANCE vs. United Rentals | REVO INSURANCE vs. NORWEGIAN AIR SHUT | REVO INSURANCE vs. Sixt Leasing SE | REVO INSURANCE vs. FORWARD AIR P |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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