Correlation Between Silicon Motion and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Silicon Motion 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 Silicon Motion and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Motion Technology and Norwegian Air Shuttle, you can compare the effects of market volatilities on Silicon Motion 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 Silicon Motion with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and Norwegian Air.
Diversification Opportunities for Silicon Motion and Norwegian Air
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Silicon and Norwegian is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle and Silicon Motion 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 Silicon Motion Technology 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 Shuttle has no effect on the direction of Silicon Motion i.e., Silicon Motion and Norwegian Air go up and down completely randomly.
Pair Corralation between Silicon Motion and Norwegian Air
Assuming the 90 days trading horizon Silicon Motion is expected to generate 4.74 times less return on investment than Norwegian Air. But when comparing it to its historical volatility, Silicon Motion Technology is 1.17 times less risky than Norwegian Air. It trades about 0.04 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 87.00 in Norwegian Air Shuttle on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Norwegian Air Shuttle or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Silicon Motion Technology |
| Norwegian Air Shuttle |
Silicon Motion and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and Norwegian Air
The main advantage of trading using opposite Silicon Motion and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion 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.| Silicon Motion vs. Norwegian Air Shuttle | Silicon Motion vs. WIZZ AIR HLDGUNSPADR4 | Silicon Motion vs. ELMOS SEMICONDUCTOR | Silicon Motion vs. Enter Air SA |
| Norwegian Air vs. NTG Nordic Transport | Norwegian Air vs. MINCO SILVER | Norwegian Air vs. Ming Le Sports | Norwegian Air vs. Sporttotal 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |