Correlation Between Paccar and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Paccar 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 Paccar and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paccar Inc and Norwegian Air Shuttle, you can compare the effects of market volatilities on Paccar 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 Paccar with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paccar and Norwegian Air.
Diversification Opportunities for Paccar and Norwegian Air
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Paccar and Norwegian is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Paccar Inc 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 Paccar 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 Paccar Inc 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 Paccar i.e., Paccar and Norwegian Air go up and down completely randomly.
Pair Corralation between Paccar and Norwegian Air
Assuming the 90 days trading horizon Paccar Inc is expected to generate 0.61 times more return on investment than Norwegian Air. However, Paccar Inc is 1.63 times less risky than Norwegian Air. It trades about 0.09 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about -0.04 per unit of risk. If you would invest 9,623 in Paccar Inc on September 24, 2024 and sell it today you would earn a total of 955.00 from holding Paccar Inc or generate 9.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Paccar Inc vs. Norwegian Air Shuttle
Performance |
Timeline |
Paccar Inc |
Norwegian Air Shuttle |
Paccar and Norwegian Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Paccar and Norwegian Air
The main advantage of trading using opposite Paccar and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paccar 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.Paccar vs. Norwegian Air Shuttle | Paccar vs. Monks Investment Trust | Paccar vs. Herald Investment Trust | Paccar vs. Aeorema Communications Plc |
Norwegian Air vs. Uniper SE | Norwegian Air vs. Mulberry Group PLC | Norwegian Air vs. London Security Plc | Norwegian Air vs. Triad Group PLC |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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