Correlation Between NorAm Drilling and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both NorAm 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 NorAm 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 NorAm Drilling AS and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on NorAm 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 NorAm Drilling with a short position of NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and NORWEGIAN AIR.
Diversification Opportunities for NorAm Drilling and NORWEGIAN AIR
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and NORWEGIAN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS 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 NorAm 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 NorAm Drilling AS 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 NorAm Drilling i.e., NorAm Drilling and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between NorAm Drilling and NORWEGIAN AIR
Assuming the 90 days trading horizon NorAm Drilling AS is expected to under-perform the NORWEGIAN AIR. But the stock apears to be less risky and, when comparing its historical volatility, NorAm Drilling AS is 1.67 times less risky than NORWEGIAN AIR. The stock trades about -0.03 of its potential returns per unit of risk. The NORWEGIAN AIR SHUT is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 94.00 in NORWEGIAN AIR SHUT on December 10, 2024 and sell it today you would earn a total of 2.00 from holding NORWEGIAN AIR SHUT or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| NorAm Drilling AS |
| NORWEGIAN AIR SHUT |
NorAm Drilling and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and NORWEGIAN AIR
The main advantage of trading using opposite NorAm Drilling and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm 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.| NorAm Drilling vs. Spirent Communications plc | NorAm Drilling vs. Easy Software AG | NorAm Drilling vs. Sims Metal Management | NorAm Drilling vs. Iridium Communications |
| NORWEGIAN AIR vs. Columbia Sportswear | NORWEGIAN AIR vs. Spirent Communications plc | NORWEGIAN AIR vs. Micron Technology | NORWEGIAN AIR vs. Beijing Media |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |