Correlation Between Novanta and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both Novanta and Keysight Technologies 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 Novanta and Keysight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novanta and Keysight Technologies, you can compare the effects of market volatilities on Novanta and Keysight Technologies 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 Novanta with a short position of Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novanta and Keysight Technologies.
Diversification Opportunities for Novanta and Keysight Technologies
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novanta and Keysight is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Novanta and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and Novanta 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 Novanta are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Novanta i.e., Novanta and Keysight Technologies go up and down completely randomly.
Pair Corralation between Novanta and Keysight Technologies
Assuming the 90 days trading horizon Novanta is expected to under-perform the Keysight Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Novanta is 1.19 times less risky than Keysight Technologies. The stock trades about -0.15 of its potential returns per unit of risk. The Keysight Technologies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 15,566 in Keysight Technologies on November 2, 2024 and sell it today you would earn a total of 554.00 from holding Keysight Technologies or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novanta vs. Keysight Technologies
Performance |
| Timeline |
| Novanta |
| Keysight Technologies |
Novanta and Keysight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novanta and Keysight Technologies
The main advantage of trading using opposite Novanta and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novanta position performs unexpectedly, Keysight Technologies 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.The idea behind Novanta and Keysight Technologies 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.| Keysight Technologies vs. ecotel communication ag | Keysight Technologies vs. Zoom Video Communications | Keysight Technologies vs. COFCO Joycome Foods | Keysight Technologies vs. Verizon Communications |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |