Correlation Between Norwegian Air and Glencore PLC

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

Diversification Opportunities for Norwegian Air and Glencore PLC

-0.53

Correlation Coefficient

Norwegian Air  Glencore PLC

Excellent diversification

The 3 months correlation between Norwegian and Glencore is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Glencore PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC 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 Glencore PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore PLC has no effect on the direction of Norwegian Air i.e., Norwegian Air and Glencore PLC go up and down completely randomly.

Pair Corralation between Norwegian Air and Glencore PLC

Assuming the 90 days horizon Norwegian Air Shuttle is expected to generate 1.57 times more return on investment than Glencore PLC. However, Norwegian Air is 1.57 times more volatile than Glencore PLC. It trades about 0.04 of its potential returns per unit of risk. Glencore PLC is currently generating about -0.13 per unit of risk. If you would invest  95.00  in Norwegian Air Shuttle on December 22, 2024 and sell it today you would earn a total of  5.00  from holding Norwegian Air Shuttle or generate 5.26% 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.  Glencore PLC

Norwegian Air Shuttle

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Norwegian Air Shuttle are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Norwegian Air may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Glencore PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Glencore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Norwegian Air and Glencore PLC

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

The idea behind Norwegian Air Shuttle and Glencore PLC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.