Correlation Between Shelf Drilling and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Shelf 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 Shelf 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 Shelf Drilling and Norwegian Air Shuttle, you can compare the effects of market volatilities on Shelf 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 Shelf Drilling with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelf Drilling and Norwegian Air.
Diversification Opportunities for Shelf Drilling and Norwegian Air
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shelf and Norwegian is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Shelf Drilling 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 Shelf 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 Shelf Drilling 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 Shelf Drilling i.e., Shelf Drilling and Norwegian Air go up and down completely randomly.
Pair Corralation between Shelf Drilling and Norwegian Air
Assuming the 90 days trading horizon Shelf Drilling is expected to under-perform the Norwegian Air. In addition to that, Shelf Drilling is 2.13 times more volatile than Norwegian Air Shuttle. It trades about -0.51 of its total potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.27 per unit of volatility. If you would invest 987.00 in Norwegian Air Shuttle on August 29, 2024 and sell it today you would earn a total of 139.00 from holding Norwegian Air Shuttle or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shelf Drilling vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Shelf Drilling |
| Norwegian Air Shuttle |
Shelf Drilling and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelf Drilling and Norwegian Air
The main advantage of trading using opposite Shelf Drilling and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelf 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.| Shelf Drilling vs. BW Offshore | Shelf Drilling vs. Elkem ASA | Shelf Drilling vs. Solstad Offsho | Shelf Drilling vs. Arcticzymes Technologies ASA |
| Norwegian Air vs. Danske Bank AS | Norwegian Air vs. Kongsberg Automotive Holding | Norwegian Air vs. Nel ASA |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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