Correlation Between Novanta and MicroSectorsTM Oil
Can any of the company-specific risk be diversified away by investing in both Novanta and MicroSectorsTM Oil 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 Novanta and MicroSectorsTM Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novanta and MicroSectorsTM Oil Gas, you can compare the effects of market volatilities on Novanta and MicroSectorsTM Oil 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 Novanta with a short position of MicroSectorsTM Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novanta and MicroSectorsTM Oil.
Diversification Opportunities for Novanta and MicroSectorsTM Oil
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Novanta and MicroSectorsTM is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Novanta and MicroSectorsTM Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectorsTM Oil Gas and Novanta 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 Novanta are associated (or correlated) with MicroSectorsTM Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectorsTM Oil Gas has no effect on the direction of Novanta i.e., Novanta and MicroSectorsTM Oil go up and down completely randomly.
Pair Corralation between Novanta and MicroSectorsTM Oil
Given the investment horizon of 90 days Novanta is expected to generate 0.44 times more return on investment than MicroSectorsTM Oil. However, Novanta is 2.28 times less risky than MicroSectorsTM Oil. It trades about 0.03 of its potential returns per unit of risk. MicroSectorsTM Oil Gas is currently generating about -0.03 per unit of risk. If you would invest 13,325 in Novanta on December 29, 2023 and sell it today you would earn a total of 4,055 from holding Novanta or generate 30.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Novanta vs. MicroSectorsTM Oil Gas
Performance |
Timeline |
Novanta |
MicroSectorsTM Oil Gas |
Novanta and MicroSectorsTM Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Novanta and MicroSectorsTM Oil
The main advantage of trading using opposite Novanta and MicroSectorsTM Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novanta position performs unexpectedly, MicroSectorsTM Oil 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 MicroSectorsTM Oil will offset losses from the drop in MicroSectorsTM Oil's long position.Novanta vs. Sensata Technologies Holding | Novanta vs. Mind Technology | Novanta vs. Electro Sensors | Novanta vs. Energous |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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