Correlation Between Astronics and Novocure
Can any of the company-specific risk be diversified away by investing in both Astronics and Novocure 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 Astronics and Novocure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astronics and Novocure, you can compare the effects of market volatilities on Astronics and Novocure 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 Astronics with a short position of Novocure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astronics and Novocure.
Diversification Opportunities for Astronics and Novocure
Excellent diversification
The 3 months correlation between Astronics and Novocure is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Astronics and Novocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novocure and Astronics 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 Astronics are associated (or correlated) with Novocure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novocure has no effect on the direction of Astronics i.e., Astronics and Novocure go up and down completely randomly.
Pair Corralation between Astronics and Novocure
Given the investment horizon of 90 days Astronics is expected to generate 8.57 times less return on investment than Novocure. But when comparing it to its historical volatility, Astronics is 1.91 times less risky than Novocure. It trades about 0.02 of its potential returns per unit of risk. Novocure is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,219 in Novocure on September 14, 2024 and sell it today you would earn a total of 2,085 from holding Novocure or generate 171.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astronics vs. Novocure
Performance |
| Timeline |
| Astronics |
| Novocure |
Astronics and Novocure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astronics and Novocure
The main advantage of trading using opposite Astronics and Novocure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astronics position performs unexpectedly, Novocure 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 Novocure will offset losses from the drop in Novocure's long position.| Astronics vs. Novocure | Astronics vs. HubSpot | Astronics vs. DigitalOcean Holdings | Astronics vs. Appian Corp |
| Novocure vs. Globus Medical | Novocure vs. Insulet | Novocure vs. Inspire Medical Systems | Novocure vs. Inari Medical |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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