Correlation Between NORWEGIAN AIR and Media

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

Diversification Opportunities for NORWEGIAN AIR and Media

-0.54

Correlation Coefficient

NORWEGIAN AIR  Media

Excellent diversification

The 3 months correlation between NORWEGIAN and Media is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Media go up and down completely randomly.

Pair Corralation between NORWEGIAN AIR and Media

Assuming the 90 days trading horizon NORWEGIAN AIR is expected to generate 12.66 times less return on investment than Media. But when comparing it to its historical volatility, NORWEGIAN AIR SHUT is 1.14 times less risky than Media. It trades about 0.01 of its potential returns per unit of risk. Media and Games is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  105.00  in Media and Games on September 20, 2024 and sell it today you would earn a total of  226.00  from holding Media and Games or generate 215.24% return on investment over 90 days.

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

NORWEGIAN AIR SHUT  vs.  Media and Games

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.

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NORWEGIAN AIR and Media

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

The idea behind NORWEGIAN AIR SHUT and Media and Games 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.