Correlation Between SPARTAN STORES and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both SPARTAN STORES 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 SPARTAN STORES and NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPARTAN STORES and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on SPARTAN STORES 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 SPARTAN STORES with a short position of NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPARTAN STORES and NORWEGIAN AIR.
Diversification Opportunities for SPARTAN STORES and NORWEGIAN AIR
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between SPARTAN and NORWEGIAN is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES 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 SPARTAN STORES 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 SPARTAN STORES 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 SPARTAN STORES i.e., SPARTAN STORES and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between SPARTAN STORES and NORWEGIAN AIR
Assuming the 90 days trading horizon SPARTAN STORES is expected to under-perform the NORWEGIAN AIR. But the stock apears to be less risky and, when comparing its historical volatility, SPARTAN STORES is 1.33 times less risky than NORWEGIAN AIR. The stock trades about -0.06 of its potential returns per unit of risk. The NORWEGIAN AIR SHUT is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 92.00 in NORWEGIAN AIR SHUT on September 2, 2024 and sell it today you would earn a total of 3.00 from holding NORWEGIAN AIR SHUT or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPARTAN STORES vs. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| SPARTAN STORES |
| NORWEGIAN AIR SHUT |
SPARTAN STORES and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPARTAN STORES and NORWEGIAN AIR
The main advantage of trading using opposite SPARTAN STORES and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTAN STORES 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.| SPARTAN STORES vs. SIVERS SEMICONDUCTORS AB | SPARTAN STORES vs. Darden Restaurants | SPARTAN STORES vs. Reliance Steel Aluminum | SPARTAN STORES vs. Q2M Managementberatung AG |
| NORWEGIAN AIR vs. SIVERS SEMICONDUCTORS AB | NORWEGIAN AIR vs. Darden Restaurants | NORWEGIAN AIR vs. Reliance Steel Aluminum | NORWEGIAN AIR vs. Q2M Managementberatung 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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