Correlation Between NORWEGIAN AIR and Wal-Mart

Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and Wal-Mart 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 Wal-Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NORWEGIAN AIR SHUT and Wal Mart de Mxico, you can compare the effects of market volatilities on NORWEGIAN AIR and Wal-Mart 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 Wal-Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and Wal-Mart.

Diversification Opportunities for NORWEGIAN AIR and Wal-Mart

-0.07

Correlation Coefficient

NORWEGIAN AIR  Wal-Mart

Good diversification

The 3 months correlation between NORWEGIAN and Wal-Mart is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Wal Mart de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de 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 SHUT are associated (or correlated) with Wal-Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Wal-Mart go up and down completely randomly.

Pair Corralation between NORWEGIAN AIR and Wal-Mart

Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 0.84 times more return on investment than Wal-Mart. However, NORWEGIAN AIR SHUT is 1.2 times less risky than Wal-Mart. It trades about 0.05 of its potential returns per unit of risk. Wal Mart de Mxico is currently generating about 0.01 per unit of risk. If you would invest  91.00  in NORWEGIAN AIR SHUT on December 2, 2024 and sell it today you would earn a total of  6.00  from holding NORWEGIAN AIR SHUT or generate 6.59% return on investment over 90 days.

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

NORWEGIAN AIR SHUT  vs.  Wal Mart de Mxico

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

Insignificant

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

Wal Mart de

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wal Mart de Mxico are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Wal-Mart is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NORWEGIAN AIR and Wal-Mart

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

The idea behind NORWEGIAN AIR SHUT and Wal Mart de Mxico 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.