Correlation Between PLATO GOLD and Novanta
Can any of the company-specific risk be diversified away by investing in both PLATO GOLD and Novanta 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 PLATO GOLD and Novanta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLATO GOLD P and Novanta, you can compare the effects of market volatilities on PLATO GOLD and Novanta 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 PLATO GOLD with a short position of Novanta. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLATO GOLD and Novanta.
Diversification Opportunities for PLATO GOLD and Novanta
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PLATO and Novanta is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PLATO GOLD P and Novanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novanta and PLATO GOLD 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 PLATO GOLD P are associated (or correlated) with Novanta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novanta has no effect on the direction of PLATO GOLD i.e., PLATO GOLD and Novanta go up and down completely randomly.
Pair Corralation between PLATO GOLD and Novanta
Assuming the 90 days horizon PLATO GOLD P is expected to generate 22.35 times more return on investment than Novanta. However, PLATO GOLD is 22.35 times more volatile than Novanta. It trades about 0.22 of its potential returns per unit of risk. Novanta is currently generating about -0.03 per unit of risk. If you would invest 0.30 in PLATO GOLD P on August 30, 2024 and sell it today you would earn a total of 0.05 from holding PLATO GOLD P or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLATO GOLD P vs. Novanta
Performance |
| Timeline |
| PLATO GOLD P |
| Novanta |
PLATO GOLD and Novanta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLATO GOLD and Novanta
The main advantage of trading using opposite PLATO GOLD and Novanta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLATO GOLD position performs unexpectedly, Novanta 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 Novanta will offset losses from the drop in Novanta's long position.| PLATO GOLD vs. COMMERCIAL VEHICLE | PLATO GOLD vs. GRUPO CARSO A1 | PLATO GOLD vs. Harmony Gold Mining | PLATO GOLD vs. GEELY AUTOMOBILE |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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