Correlation Between Norwegian Air and Catalyst Media

Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Catalyst Media 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 Catalyst Media 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 Catalyst Media Group, you can compare the effects of market volatilities on Norwegian Air and Catalyst Media 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 Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Catalyst Media.

Diversification Opportunities for Norwegian Air and Catalyst Media

-0.47

Correlation Coefficient

Norwegian Air  Catalyst Media

Very good diversification

The 3 months correlation between Norwegian and Catalyst is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group 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 Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Norwegian Air i.e., Norwegian Air and Catalyst Media go up and down completely randomly.

Pair Corralation between Norwegian Air and Catalyst Media

Assuming the 90 days trading horizon Norwegian Air is expected to generate 9.12 times less return on investment than Catalyst Media. In addition to that, Norwegian Air is 1.83 times more volatile than Catalyst Media Group. It trades about 0.0 of its total potential returns per unit of risk. Catalyst Media Group is currently generating about 0.06 per unit of volatility. If you would invest  8,500  in Catalyst Media Group on September 3, 2024 and sell it today you would earn a total of  500.00  from holding Catalyst Media Group or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Norwegian Air Shuttle  vs.  Catalyst Media Group

Norwegian Air Shuttle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norwegian Air Shuttle has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Norwegian Air is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Catalyst Media Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Media Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Catalyst Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Norwegian Air and Catalyst Media

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

The idea behind Norwegian Air Shuttle and Catalyst Media 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.