Correlation Between Novan and Aim Treasurers

Can any of the company-specific risk be diversified away by investing in both Novan and Aim Treasurers 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 Novan and Aim Treasurers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Novan Inc and Aim Treasurers Series, you can compare the effects of market volatilities on Novan and Aim Treasurers 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 Novan with a short position of Aim Treasurers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novan and Aim Treasurers.

Diversification Opportunities for Novan and Aim Treasurers

-0.59

Correlation Coefficient

Novan  Aim Treasurers

Excellent diversification

The 3 months correlation between Novan and Aim is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Novan Inc and Aim Treasurers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Treasurers Series and Novan 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 Novan Inc are associated (or correlated) with Aim Treasurers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Treasurers Series has no effect on the direction of Novan i.e., Novan and Aim Treasurers go up and down completely randomly.

Pair Corralation between Novan and Aim Treasurers

If you would invest  99.00  in Aim Treasurers Series on January 26, 2024 and sell it today you would earn a total of  1.00  from holding Aim Treasurers Series or generate 1.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.61%
Values	Daily Returns

Novan Inc  vs.  Aim Treasurers Series

Novan Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novan Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Novan is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Aim Treasurers Series

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aim Treasurers Series are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aim Treasurers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Novan and Aim Treasurers

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

The idea behind Novan Inc and Aim Treasurers Series 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.