Correlation Between Littelfuse and Nidec
Can any of the company-specific risk be diversified away by investing in both Littelfuse and Nidec 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 Littelfuse and Nidec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Littelfuse and Nidec, you can compare the effects of market volatilities on Littelfuse and Nidec 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 Littelfuse with a short position of Nidec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Littelfuse and Nidec.
Diversification Opportunities for Littelfuse and Nidec
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Littelfuse and Nidec is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Littelfuse and Nidec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidec and Littelfuse 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 Littelfuse are associated (or correlated) with Nidec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidec has no effect on the direction of Littelfuse i.e., Littelfuse and Nidec go up and down completely randomly.
Pair Corralation between Littelfuse and Nidec
Given the investment horizon of 90 days Littelfuse is expected to generate 0.87 times more return on investment than Nidec. However, Littelfuse is 1.15 times less risky than Nidec. It trades about 0.01 of its potential returns per unit of risk. Nidec is currently generating about -0.04 per unit of risk. If you would invest 27,044 in Littelfuse on February 26, 2024 and sell it today you would lose (1,039) from holding Littelfuse or give up 3.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 34.61% |
Values | Daily Returns |
Littelfuse vs. Nidec
Performance |
Timeline |
Littelfuse |
Nidec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Littelfuse and Nidec Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Littelfuse and Nidec
The main advantage of trading using opposite Littelfuse and Nidec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Littelfuse position performs unexpectedly, Nidec 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 Nidec will offset losses from the drop in Nidec's long position.Littelfuse vs. Plexus Corp | Littelfuse vs. Celestica | Littelfuse vs. Benchmark Electronics | Littelfuse vs. Flex |
Nidec vs. Daifuku Co | Nidec vs. Eaton PLC | Nidec vs. Yokogawa Electric Corp | Nidec vs. Brewbilt Manufacturing |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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