Correlation Between AUSTEVOLL SEAFOOD and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD and NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUSTEVOLL SEAFOOD and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD with a short position of NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUSTEVOLL SEAFOOD and NORWEGIAN AIR.
Diversification Opportunities for AUSTEVOLL SEAFOOD and NORWEGIAN AIR
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AUSTEVOLL and NORWEGIAN is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD i.e., AUSTEVOLL SEAFOOD and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between AUSTEVOLL SEAFOOD and NORWEGIAN AIR
Assuming the 90 days trading horizon AUSTEVOLL SEAFOOD is expected to generate 1.44 times less return on investment than NORWEGIAN AIR. But when comparing it to its historical volatility, AUSTEVOLL SEAFOOD is 1.85 times less risky than NORWEGIAN AIR. It trades about 0.3 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 84.00 in NORWEGIAN AIR SHUT on September 3, 2024 and sell it today you would earn a total of 11.00 from holding NORWEGIAN AIR SHUT or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AUSTEVOLL SEAFOOD vs. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| AUSTEVOLL SEAFOOD |
| NORWEGIAN AIR SHUT |
AUSTEVOLL SEAFOOD and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUSTEVOLL SEAFOOD and NORWEGIAN AIR
The main advantage of trading using opposite AUSTEVOLL SEAFOOD and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUSTEVOLL SEAFOOD 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.| AUSTEVOLL SEAFOOD vs. TOTAL GABON | AUSTEVOLL SEAFOOD vs. Walgreens Boots Alliance | AUSTEVOLL SEAFOOD vs. Peak Resources Limited |
| NORWEGIAN AIR vs. TOTAL GABON | NORWEGIAN AIR vs. Walgreens Boots Alliance | NORWEGIAN AIR vs. Peak Resources Limited |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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