Correlation Between Norwegian Cruise and Gen Digital

Can any of the company-specific risk be diversified away by investing in both Norwegian Cruise and Gen Digital 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 Cruise and Gen Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Norwegian Cruise Line and Gen Digital, you can compare the effects of market volatilities on Norwegian Cruise and Gen Digital 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 Cruise with a short position of Gen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Cruise and Gen Digital.

Diversification Opportunities for Norwegian Cruise and Gen Digital

0.0

Correlation Coefficient

Norwegian Cruise  Gen Digital

Pay attention - limited upside

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

Pair Corralation between Norwegian Cruise and Gen Digital

If you would invest  13,472  in Gen Digital on October 4, 2024 and sell it today you would earn a total of  4,421  from holding Gen Digital or generate 32.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

Norwegian Cruise Line  vs.  Gen Digital

Norwegian Cruise Line

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Norwegian Cruise Line has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Norwegian Cruise is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gen Digital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gen Digital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gen Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Norwegian Cruise and Gen Digital

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

The idea behind Norwegian Cruise Line and Gen Digital 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.