Correlation Between Sogn Sparebank and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Sogn Sparebank 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 Sogn Sparebank and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sogn Sparebank and Norwegian Air Shuttle, you can compare the effects of market volatilities on Sogn Sparebank 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 Sogn Sparebank with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sogn Sparebank and Norwegian Air.
Diversification Opportunities for Sogn Sparebank and Norwegian Air
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sogn and Norwegian is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sogn Sparebank 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 Sogn Sparebank 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 Sogn Sparebank 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 Sogn Sparebank i.e., Sogn Sparebank and Norwegian Air go up and down completely randomly.
Pair Corralation between Sogn Sparebank and Norwegian Air
Assuming the 90 days trading horizon Sogn Sparebank is expected to generate 0.64 times more return on investment than Norwegian Air. However, Sogn Sparebank is 1.57 times less risky than Norwegian Air. It trades about 0.1 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.03 per unit of risk. If you would invest 14,374 in Sogn Sparebank on September 12, 2024 and sell it today you would earn a total of 10,621 from holding Sogn Sparebank or generate 73.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sogn Sparebank vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Sogn Sparebank |
| Norwegian Air Shuttle |
Sogn Sparebank and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sogn Sparebank and Norwegian Air
The main advantage of trading using opposite Sogn Sparebank and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sogn Sparebank 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.| Sogn Sparebank vs. Sparebanken Sor | Sogn Sparebank vs. SpareBank 1 stlandet | Sogn Sparebank vs. Kongsberg Gruppen ASA | Sogn Sparebank vs. Napatech AS |
| Norwegian Air vs. Danske Bank AS | Norwegian Air vs. Kongsberg Automotive Holding | Norwegian Air vs. Kongsberg Gruppen ASA | Norwegian Air vs. Napatech AS |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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