Correlation Between Vow ASA and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Vow ASA 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 Vow ASA and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vow ASA and Norwegian Air Shuttle, you can compare the effects of market volatilities on Vow ASA 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 Vow ASA with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and Norwegian Air.
Diversification Opportunities for Vow ASA and Norwegian Air
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vow and Norwegian is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA 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 Vow ASA 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 Vow ASA 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 Vow ASA i.e., Vow ASA and Norwegian Air go up and down completely randomly.
Pair Corralation between Vow ASA and Norwegian Air
Assuming the 90 days trading horizon Vow ASA is expected to under-perform the Norwegian Air. In addition to that, Vow ASA is 1.12 times more volatile than Norwegian Air Shuttle. It trades about -0.23 of its total potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.02 per unit of volatility. If you would invest 1,118 in Norwegian Air Shuttle on November 9, 2024 and sell it today you would earn a total of 3.00 from holding Norwegian Air Shuttle or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vow ASA vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Vow ASA |
| Norwegian Air Shuttle |
Vow ASA and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vow ASA and Norwegian Air
The main advantage of trading using opposite Vow ASA and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vow ASA 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.| Vow ASA vs. Hexagon Composites ASA | Vow ASA vs. Vow Green Metals | Vow ASA vs. REC Silicon ASA | Vow ASA vs. Aker Carbon Capture |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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