Correlation Between CAE and Nanalysis Scientific
Can any of the company-specific risk be diversified away by investing in both CAE and Nanalysis Scientific 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 CAE and Nanalysis Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAE Inc and Nanalysis Scientific Corp, you can compare the effects of market volatilities on CAE and Nanalysis Scientific 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 CAE with a short position of Nanalysis Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAE and Nanalysis Scientific.
Diversification Opportunities for CAE and Nanalysis Scientific
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CAE and Nanalysis is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding CAE Inc and Nanalysis Scientific Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanalysis Scientific Corp and CAE 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 CAE Inc are associated (or correlated) with Nanalysis Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanalysis Scientific Corp has no effect on the direction of CAE i.e., CAE and Nanalysis Scientific go up and down completely randomly.
Pair Corralation between CAE and Nanalysis Scientific
Assuming the 90 days trading horizon CAE is expected to generate 3.38 times less return on investment than Nanalysis Scientific. But when comparing it to its historical volatility, CAE Inc is 2.76 times less risky than Nanalysis Scientific. It trades about 0.08 of its potential returns per unit of risk. Nanalysis Scientific Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Nanalysis Scientific Corp on October 21, 2024 and sell it today you would earn a total of 2.00 from holding Nanalysis Scientific Corp or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAE Inc vs. Nanalysis Scientific Corp
Performance |
| Timeline |
| CAE Inc |
| Nanalysis Scientific Corp |
CAE and Nanalysis Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAE and Nanalysis Scientific
The main advantage of trading using opposite CAE and Nanalysis Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAE position performs unexpectedly, Nanalysis Scientific 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 Nanalysis Scientific will offset losses from the drop in Nanalysis Scientific's long position.The idea behind CAE Inc and Nanalysis Scientific Corp 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.| Nanalysis Scientific vs. Senvest Capital | Nanalysis Scientific vs. Fairfax Financial Holdings | Nanalysis Scientific vs. Bank of Montreal | Nanalysis Scientific vs. Bank of Montreal |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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