Correlation Between Advanced Energy and Nexans SA
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and Nexans SA 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 Advanced Energy and Nexans SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Energy Industries and Nexans SA, you can compare the effects of market volatilities on Advanced Energy and Nexans SA 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 Advanced Energy with a short position of Nexans SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and Nexans SA.
Diversification Opportunities for Advanced Energy and Nexans SA
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Advanced and Nexans is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Industries and Nexans SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexans SA and Advanced Energy 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 Advanced Energy Industries are associated (or correlated) with Nexans SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexans SA has no effect on the direction of Advanced Energy i.e., Advanced Energy and Nexans SA go up and down completely randomly.
Pair Corralation between Advanced Energy and Nexans SA
Given the investment horizon of 90 days Advanced Energy Industries is expected to generate 1.41 times more return on investment than Nexans SA. However, Advanced Energy is 1.41 times more volatile than Nexans SA. It trades about 0.01 of its potential returns per unit of risk. Nexans SA is currently generating about -0.32 per unit of risk. If you would invest 11,534 in Advanced Energy Industries on November 3, 2024 and sell it today you would lose (26.00) from holding Advanced Energy Industries or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Energy Industries vs. Nexans SA
Performance |
| Timeline |
| Advanced Energy Indu |
| Nexans SA |
Advanced Energy and Nexans SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and Nexans SA
The main advantage of trading using opposite Advanced Energy and Nexans SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, Nexans SA 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 Nexans SA will offset losses from the drop in Nexans SA's long position.| Advanced Energy vs. MKS Instruments | Advanced Energy vs. Axcelis Technologies | Advanced Energy vs. Entegris | Advanced Energy vs. Cohu Inc |
| Nexans SA vs. Novonix | Nexans SA vs. Novonix Ltd ADR | Nexans SA vs. China Carbon Graphit | Nexans SA vs. Flux Power Holdings |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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