Correlation Between Norwegian Air and Johnson Matthey
Can any of the company-specific risk be diversified away by investing in both Norwegian Air and Johnson Matthey 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 Johnson Matthey 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 Johnson Matthey PLC, you can compare the effects of market volatilities on Norwegian Air and Johnson Matthey 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 Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norwegian Air and Johnson Matthey.
Diversification Opportunities for Norwegian Air and Johnson Matthey
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Norwegian and Johnson is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey 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 Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Norwegian Air i.e., Norwegian Air and Johnson Matthey go up and down completely randomly.
Pair Corralation between Norwegian Air and Johnson Matthey
Assuming the 90 days horizon Norwegian Air Shuttle is expected to generate 1.6 times more return on investment than Johnson Matthey. However, Norwegian Air is 1.6 times more volatile than Johnson Matthey PLC. It trades about 0.02 of its potential returns per unit of risk. Johnson Matthey PLC is currently generating about -0.03 per unit of risk. If you would invest 87.00 in Norwegian Air Shuttle on October 22, 2024 and sell it today you would earn a total of 0.00 from holding Norwegian Air Shuttle or generate 0.0% 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. Johnson Matthey PLC
Performance |
Timeline |
Norwegian Air Shuttle |
Johnson Matthey PLC |
Norwegian Air and Johnson Matthey Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Norwegian Air and Johnson Matthey
The main advantage of trading using opposite Norwegian Air and Johnson Matthey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norwegian Air position performs unexpectedly, Johnson Matthey 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 Johnson Matthey will offset losses from the drop in Johnson Matthey's long position.Norwegian Air vs. Kingdee International Software | Norwegian Air vs. Easy Software AG | Norwegian Air vs. Townsquare Media | Norwegian Air vs. Alfa Financial Software |
Johnson Matthey vs. JLF INVESTMENT | Johnson Matthey vs. Sunstone Hotel Investors | Johnson Matthey vs. MEDCAW INVESTMENTS LS 01 | Johnson Matthey vs. Apollo Investment Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |