Correlation Between NORWEGIAN AIR and Gentex

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

Diversification Opportunities for NORWEGIAN AIR and Gentex

0.04

Correlation Coefficient

NORWEGIAN AIR  Gentex

Significant diversification

The 3 months correlation between NORWEGIAN and Gentex is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Gentex go up and down completely randomly.

Pair Corralation between NORWEGIAN AIR and Gentex

Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 2.8 times more return on investment than Gentex. However, NORWEGIAN AIR is 2.8 times more volatile than Gentex. It trades about -0.06 of its potential returns per unit of risk. Gentex is currently generating about -0.22 per unit of risk. If you would invest  93.00  in NORWEGIAN AIR SHUT on October 24, 2024 and sell it today you would lose (3.00) from holding NORWEGIAN AIR SHUT or give up 3.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

NORWEGIAN AIR SHUT  vs.  Gentex

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORWEGIAN AIR SHUT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NORWEGIAN AIR is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Gentex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gentex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gentex 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 Gentex

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

The idea behind NORWEGIAN AIR SHUT and Gentex 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 CEOs Directory module to screen CEOs from public companies around the world.