Correlation Between NORWEGIAN AIR and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and Highlight Communications 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 Highlight Communications 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 Highlight Communications AG, you can compare the effects of market volatilities on NORWEGIAN AIR and Highlight Communications 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 Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and Highlight Communications.
Diversification Opportunities for NORWEGIAN AIR and Highlight Communications
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NORWEGIAN and Highlight is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications 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 Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Highlight Communications go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and Highlight Communications
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 0.49 times more return on investment than Highlight Communications. However, NORWEGIAN AIR SHUT is 2.04 times less risky than Highlight Communications. It trades about 0.03 of its potential returns per unit of risk. Highlight Communications AG is currently generating about 0.01 per unit of risk. If you would invest 94.00 in NORWEGIAN AIR SHUT on December 3, 2024 and sell it today you would earn a total of 3.00 from holding NORWEGIAN AIR SHUT or generate 3.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NORWEGIAN AIR SHUT vs. Highlight Communications AG
Performance |
Timeline |
NORWEGIAN AIR SHUT |
Highlight Communications |
NORWEGIAN AIR and Highlight Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NORWEGIAN AIR and Highlight Communications
The main advantage of trading using opposite NORWEGIAN AIR and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.NORWEGIAN AIR vs. Media and Games | NORWEGIAN AIR vs. Sekisui Chemical Co | NORWEGIAN AIR vs. Boyd Gaming | NORWEGIAN AIR vs. GAMING FAC SA |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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