Correlation Between PRECISION DRILLING and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING and NORWEGIAN AIR 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 PRECISION DRILLING and NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PRECISION DRILLING P and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on PRECISION DRILLING and NORWEGIAN AIR 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 PRECISION DRILLING with a short position of NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and NORWEGIAN AIR.
Diversification Opportunities for PRECISION DRILLING and NORWEGIAN AIR
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between PRECISION and NORWEGIAN is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT and PRECISION DRILLING 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 PRECISION DRILLING P are associated (or correlated) with NORWEGIAN AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORWEGIAN AIR SHUT has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between PRECISION DRILLING and NORWEGIAN AIR
Assuming the 90 days trading horizon PRECISION DRILLING P is expected to generate 0.73 times more return on investment than NORWEGIAN AIR. However, PRECISION DRILLING P is 1.37 times less risky than NORWEGIAN AIR. It trades about 0.07 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about -0.07 per unit of risk. If you would invest 5,500 in PRECISION DRILLING P on August 30, 2024 and sell it today you would earn a total of 350.00 from holding PRECISION DRILLING P or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
PRECISION DRILLING P vs. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| PRECISION DRILLING |
| NORWEGIAN AIR SHUT |
PRECISION DRILLING and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PRECISION DRILLING and NORWEGIAN AIR
The main advantage of trading using opposite PRECISION DRILLING and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING position performs unexpectedly, NORWEGIAN AIR 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 NORWEGIAN AIR will offset losses from the drop in NORWEGIAN AIR's long position.| PRECISION DRILLING vs. SHELF DRILLING LTD | PRECISION DRILLING vs. Superior Plus Corp | PRECISION DRILLING vs. SIVERS SEMICONDUCTORS AB | PRECISION DRILLING vs. Talanx AG |
| NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Superior Plus Corp | NORWEGIAN AIR vs. SIVERS SEMICONDUCTORS AB |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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