Correlation Between NORWEGIAN AIR and Webster Financial

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

Diversification Opportunities for NORWEGIAN AIR and Webster Financial

0.74

Correlation Coefficient

NORWEGIAN AIR  Webster Financial

Poor diversification

The 3 months correlation between NORWEGIAN and Webster is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial 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 Webster Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webster Financial has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Webster Financial go up and down completely randomly.

Pair Corralation between NORWEGIAN AIR and Webster Financial

Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 1.51 times more return on investment than Webster Financial. However, NORWEGIAN AIR is 1.51 times more volatile than Webster Financial. It trades about 0.16 of its potential returns per unit of risk. Webster Financial is currently generating about 0.14 per unit of risk. If you would invest  109.00  in NORWEGIAN AIR SHUT on April 23, 2025 and sell it today you would earn a total of  36.00  from holding NORWEGIAN AIR SHUT or generate 33.03% return on investment over 90 days.

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

NORWEGIAN AIR SHUT  vs.  Webster Financial

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NORWEGIAN AIR SHUT are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NORWEGIAN AIR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Webster Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Webster Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Webster Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NORWEGIAN AIR and Webster Financial

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

The idea behind NORWEGIAN AIR SHUT and Webster Financial 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.