Correlation Between Novanta and HEXAGON AB
Can any of the company-specific risk be diversified away by investing in both Novanta and HEXAGON AB 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 HEXAGON AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novanta and HEXAGON AB ADR1, you can compare the effects of market volatilities on Novanta and HEXAGON AB 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 HEXAGON AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novanta and HEXAGON AB.
Diversification Opportunities for Novanta and HEXAGON AB
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Novanta and HEXAGON is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Novanta and HEXAGON AB ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXAGON AB ADR1 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 HEXAGON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXAGON AB ADR1 has no effect on the direction of Novanta i.e., Novanta and HEXAGON AB go up and down completely randomly.
Pair Corralation between Novanta and HEXAGON AB
Assuming the 90 days trading horizon Novanta is expected to generate 1.01 times more return on investment than HEXAGON AB. However, Novanta is 1.01 times more volatile than HEXAGON AB ADR1. It trades about 0.0 of its potential returns per unit of risk. HEXAGON AB ADR1 is currently generating about -0.15 per unit of risk. If you would invest 15,900 in Novanta on September 4, 2024 and sell it today you would lose (100.00) from holding Novanta or give up 0.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Novanta vs. HEXAGON AB ADR1
Performance |
| Timeline |
| Novanta |
| HEXAGON AB ADR1 |
Novanta and HEXAGON AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novanta and HEXAGON AB
The main advantage of trading using opposite Novanta and HEXAGON AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novanta position performs unexpectedly, HEXAGON AB 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 HEXAGON AB will offset losses from the drop in HEXAGON AB's long position.| Novanta vs. HEXAGON AB ADR1 | Novanta vs. Teledyne Technologies Incorporated | Novanta vs. Trimble | Novanta vs. MKS Instruments |
| HEXAGON AB vs. Teledyne Technologies Incorporated | HEXAGON AB vs. Trimble | HEXAGON AB vs. MKS Instruments |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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