Correlation Between NORWEGIAN AIR and Zurich Insurance

Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and Zurich Insurance 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 Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NORWEGIAN AIR SHUT and Zurich Insurance Group, you can compare the effects of market volatilities on NORWEGIAN AIR and Zurich Insurance 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 Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and Zurich Insurance.

Diversification Opportunities for NORWEGIAN AIR and Zurich Insurance

0.0

Correlation Coefficient

NORWEGIAN AIR  Zurich Insurance

Pay attention - limited upside

The 3 months correlation between NORWEGIAN and Zurich is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance 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 SHUT are associated (or correlated) with Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Zurich Insurance go up and down completely randomly.

Pair Corralation between NORWEGIAN AIR and Zurich Insurance

Assuming the 90 days trading horizon NORWEGIAN AIR is expected to generate 2.8 times less return on investment than Zurich Insurance. In addition to that, NORWEGIAN AIR is 1.4 times more volatile than Zurich Insurance Group. It trades about 0.03 of its total potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.12 per unit of volatility. If you would invest  2,580  in Zurich Insurance Group on September 2, 2024 and sell it today you would earn a total of  440.00  from holding Zurich Insurance Group or generate 17.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NORWEGIAN AIR SHUT  vs.  Zurich Insurance Group

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NORWEGIAN AIR SHUT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, NORWEGIAN AIR is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Zurich Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zurich Insurance Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Zurich Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NORWEGIAN AIR and Zurich Insurance

The main advantage of trading using opposite NORWEGIAN AIR and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, Zurich Insurance 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 Zurich Insurance will offset losses from the drop in Zurich Insurance's long position.

The idea behind NORWEGIAN AIR SHUT and Zurich Insurance Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..