Correlation Between Norwegian Air and Nordic Mining
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Nordic Mining 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 Norwegian Air and Nordic Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norwegian Air Shuttle and Nordic Mining ASA, you can compare the effects of market volatilities on Norwegian Air and Nordic Mining 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 Norwegian Air with a short position of Nordic Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Nordic Mining.
Diversification Opportunities for Norwegian Air and Nordic Mining
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norwegian and Nordic is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Nordic Mining ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Mining ASA and Norwegian Air 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 Norwegian Air Shuttle are associated (or correlated) with Nordic Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Mining ASA has no effect on the direction of Norwegian Air i.e., Norwegian Air and Nordic Mining go up and down completely randomly.
Pair Corralation between Norwegian Air and Nordic Mining
Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 1.67 times more return on investment than Nordic Mining. However, Norwegian Air is 1.67 times more volatile than Nordic Mining ASA. It trades about 0.01 of its potential returns per unit of risk. Nordic Mining ASA is currently generating about -0.02 per unit of risk. If you would invest 1,134 in Norwegian Air Shuttle on September 14, 2024 and sell it today you would lose (4.00) from holding Norwegian Air Shuttle or give up 0.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Norwegian Air Shuttle vs. Nordic Mining ASA
Performance |
Timeline |
Norwegian Air Shuttle |
Nordic Mining ASA |
Norwegian Air and Nordic Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Norwegian Air and Nordic Mining
The main advantage of trading using opposite Norwegian Air and Nordic Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Nordic Mining 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 Nordic Mining will offset losses from the drop in Nordic Mining's long position.Norwegian Air vs. Danske Bank AS | Norwegian Air vs. Kongsberg Automotive Holding | Norwegian Air vs. Kongsberg Gruppen ASA | Norwegian Air vs. Napatech AS |
Nordic Mining vs. Kongsberg Gruppen ASA | Nordic Mining vs. Napatech AS | Nordic Mining vs. Elkem ASA | Nordic Mining vs. Arcticzymes Technologies 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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