Correlation Between NORWEGIAN AIR and Microsoft
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on NORWEGIAN AIR and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and Microsoft.
Diversification Opportunities for NORWEGIAN AIR and Microsoft
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between NORWEGIAN and Microsoft is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Microsoft go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and Microsoft
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 2.04 times more return on investment than Microsoft. However, NORWEGIAN AIR is 2.04 times more volatile than Microsoft. It trades about 0.14 of its potential returns per unit of risk. Microsoft is currently generating about 0.18 per unit of risk. If you would invest 88.00 in NORWEGIAN AIR SHUT on September 2, 2024 and sell it today you would earn a total of 7.00 from holding NORWEGIAN AIR SHUT or generate 7.95% 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. Microsoft
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| Microsoft |
NORWEGIAN AIR and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and Microsoft
The main advantage of trading using opposite NORWEGIAN AIR and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft'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 |
| Microsoft vs. NORWEGIAN AIR SHUT | Microsoft vs. Ryanair Holdings plc | Microsoft vs. Fair Isaac Corp | Microsoft vs. Air New Zealand |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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