Correlation Between Novo Integrated and Alcon AG

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

By analyzing existing cross correlation between Novo Integrated Sciences and Alcon AG, you can compare the effects of market volatilities on Novo Integrated and Alcon AG 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 Novo Integrated with a short position of Alcon AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Integrated and Alcon AG.

Diversification Opportunities for Novo Integrated and Alcon AG

-0.11

Correlation Coefficient

Novo Integrated  Alcon AG

Good diversification

The 3 months correlation between Novo and Alcon is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Novo Integrated Sciences and Alcon AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcon AG and Novo Integrated 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 Novo Integrated Sciences are associated (or correlated) with Alcon AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcon AG has no effect on the direction of Novo Integrated i.e., Novo Integrated and Alcon AG go up and down completely randomly.

Pair Corralation between Novo Integrated and Alcon AG

Given the investment horizon of 90 days Novo Integrated Sciences is expected to under-perform the Alcon AG. In addition to that, Novo Integrated is 6.15 times more volatile than Alcon AG. It trades about -0.02 of its total potential returns per unit of risk. Alcon AG is currently generating about 0.03 per unit of volatility. If you would invest  7,621  in Alcon AG on February 22, 2024 and sell it today you would earn a total of  1,249  from holding Alcon AG or generate 16.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Novo Integrated Sciences  vs.  Alcon AG

Novo Integrated Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novo Integrated Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Alcon AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alcon AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Alcon AG may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Novo Integrated and Alcon AG

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

The idea behind Novo Integrated Sciences and Alcon AG 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.