Correlation Between Norwegian Air and Liontrust Asset

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

Diversification Opportunities for Norwegian Air and Liontrust Asset

0.02

Correlation Coefficient

Norwegian Air  Liontrust Asset

Significant diversification

The 3 months correlation between Norwegian and Liontrust is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Liontrust Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontrust Asset Mana 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 Liontrust Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontrust Asset Mana has no effect on the direction of Norwegian Air i.e., Norwegian Air and Liontrust Asset go up and down completely randomly.

Pair Corralation between Norwegian Air and Liontrust Asset

Assuming the 90 days trading horizon Norwegian Air Shuttle is expected to generate 1.1 times more return on investment than Liontrust Asset. However, Norwegian Air is 1.1 times more volatile than Liontrust Asset Management. It trades about 0.06 of its potential returns per unit of risk. Liontrust Asset Management is currently generating about -0.08 per unit of risk. If you would invest  1,108  in Norwegian Air Shuttle on December 26, 2024 and sell it today you would earn a total of  79.00  from holding Norwegian Air Shuttle or generate 7.13% return on investment over 90 days.

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

Norwegian Air Shuttle  vs.  Liontrust Asset Management

Norwegian Air Shuttle

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Norwegian Air Shuttle are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Norwegian Air may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Liontrust Asset Mana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liontrust Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Norwegian Air and Liontrust Asset

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

The idea behind Norwegian Air Shuttle and Liontrust Asset Management 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.