Correlation Between NORWEGIAN AIR and PUMA SE

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

Diversification Opportunities for NORWEGIAN AIR and PUMA SE

-0.57

Correlation Coefficient

NORWEGIAN AIR  PUMA SE

Excellent diversification

The 3 months correlation between NORWEGIAN and PUMA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and PUMA SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PUMA SE 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 PUMA SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PUMA SE has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and PUMA SE go up and down completely randomly.

Pair Corralation between NORWEGIAN AIR and PUMA SE

Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to under-perform the PUMA SE. In addition to that, NORWEGIAN AIR is 1.4 times more volatile than PUMA SE. It trades about -0.03 of its total potential returns per unit of risk. PUMA SE is currently generating about 0.16 per unit of volatility. If you would invest  3,668  in PUMA SE on October 6, 2024 and sell it today you would earn a total of  706.00  from holding PUMA SE or generate 19.25% 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.  PUMA SE

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

PUMA SE

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PUMA SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PUMA SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NORWEGIAN AIR and PUMA SE

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

The idea behind NORWEGIAN AIR SHUT and PUMA SE 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.