Correlation Between Novocure and Smead Value
Can any of the company-specific risk be diversified away by investing in both Novocure and Smead Value 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 Novocure and Smead Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novocure and Smead Value Fund, you can compare the effects of market volatilities on Novocure and Smead Value 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 Novocure with a short position of Smead Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novocure and Smead Value.
Diversification Opportunities for Novocure and Smead Value
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Novocure and Smead is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Novocure and Smead Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead Value Fund and Novocure 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 Novocure are associated (or correlated) with Smead Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead Value Fund has no effect on the direction of Novocure i.e., Novocure and Smead Value go up and down completely randomly.
Pair Corralation between Novocure and Smead Value
Given the investment horizon of 90 days Novocure is expected to under-perform the Smead Value. In addition to that, Novocure is 4.47 times more volatile than Smead Value Fund. It trades about -0.04 of its total potential returns per unit of risk. Smead Value Fund is currently generating about -0.03 per unit of volatility. If you would invest 8,246 in Smead Value Fund on January 26, 2024 and sell it today you would lose (62.00) from holding Smead Value Fund or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novocure vs. Smead Value Fund
Performance |
| Timeline |
| Novocure |
| Smead Value Fund |
Novocure and Smead Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novocure and Smead Value
The main advantage of trading using opposite Novocure and Smead Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novocure position performs unexpectedly, Smead Value 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 Smead Value will offset losses from the drop in Smead Value's long position.The idea behind Novocure and Smead Value Fund 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.| Smead Value vs. Edgewood Growth Fund | Smead Value vs. Hartford Schroders Emerging | Smead Value vs. HUMANA INC | Smead Value vs. Aquagold International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |