Correlation Between Ilex Medical and Nice
Can any of the company-specific risk be diversified away by investing in both Ilex Medical and Nice 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 Ilex Medical and Nice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ilex Medical and Nice, you can compare the effects of market volatilities on Ilex Medical and Nice 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 Ilex Medical with a short position of Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ilex Medical and Nice.
Diversification Opportunities for Ilex Medical and Nice
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ilex and Nice is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ilex Medical and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice and Ilex Medical 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 Ilex Medical are associated (or correlated) with Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of Ilex Medical i.e., Ilex Medical and Nice go up and down completely randomly.
Pair Corralation between Ilex Medical and Nice
Assuming the 90 days trading horizon Ilex Medical is expected to generate 1.18 times more return on investment than Nice. However, Ilex Medical is 1.18 times more volatile than Nice. It trades about 0.41 of its potential returns per unit of risk. Nice is currently generating about -0.4 per unit of risk. If you would invest 610,255 in Ilex Medical on January 26, 2024 and sell it today you would earn a total of 76,745 from holding Ilex Medical or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ilex Medical vs. Nice
Performance |
| Timeline |
| Ilex Medical |
| Nice |
Ilex Medical and Nice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ilex Medical and Nice
The main advantage of trading using opposite Ilex Medical and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ilex Medical position performs unexpectedly, Nice 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 Nice will offset losses from the drop in Nice's long position.The idea behind Ilex Medical and Nice 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.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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