Correlation Between Norwegian Air and Cal-Maine Foods
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Cal-Maine Foods 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 Cal-Maine Foods 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 Cal Maine Foods, you can compare the effects of market volatilities on Norwegian Air and Cal-Maine Foods 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 Cal-Maine Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Cal-Maine Foods.
Diversification Opportunities for Norwegian Air and Cal-Maine Foods
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Norwegian and Cal-Maine is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods 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 Cal-Maine Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of Norwegian Air i.e., Norwegian Air and Cal-Maine Foods go up and down completely randomly.
Pair Corralation between Norwegian Air and Cal-Maine Foods
Assuming the 90 days horizon Norwegian Air Shuttle is expected to generate 0.93 times more return on investment than Cal-Maine Foods. However, Norwegian Air Shuttle is 1.07 times less risky than Cal-Maine Foods. It trades about 0.16 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.04 per unit of risk. If you would invest 98.00 in Norwegian Air Shuttle on December 28, 2024 and sell it today you would earn a total of 11.00 from holding Norwegian Air Shuttle or generate 11.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Norwegian Air Shuttle vs. Cal Maine Foods
Performance |
Timeline |
Norwegian Air Shuttle |
Cal Maine Foods |
Norwegian Air and Cal-Maine Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Norwegian Air and Cal-Maine Foods
The main advantage of trading using opposite Norwegian Air and Cal-Maine Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Cal-Maine Foods 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 Cal-Maine Foods will offset losses from the drop in Cal-Maine Foods' long position.Norwegian Air vs. SOGECLAIR SA INH | Norwegian Air vs. Altair Engineering | Norwegian Air vs. MYFAIR GOLD P | Norwegian Air vs. Corsair Gaming |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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