Correlation Between Core Main and Now
Can any of the company-specific risk be diversified away by investing in both Core Main and Now 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 Core Main and Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Main and Now Inc, you can compare the effects of market volatilities on Core Main and Now 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 Core Main with a short position of Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Main and Now.
Diversification Opportunities for Core Main and Now
Average diversification
The 3 months correlation between Core and Now is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Core Main and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc and Core Main 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 Core Main are associated (or correlated) with Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of Core Main i.e., Core Main and Now go up and down completely randomly.
Pair Corralation between Core Main and Now
Considering the 90-day investment horizon Core Main is expected to generate 4.18 times less return on investment than Now. But when comparing it to its historical volatility, Core Main is 1.26 times less risky than Now. It trades about 0.1 of its potential returns per unit of risk. Now Inc is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,198 in Now Inc on August 27, 2024 and sell it today you would earn a total of 301.00 from holding Now Inc or generate 25.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Main vs. Now Inc
Performance |
| Timeline |
| Core Main |
| Now Inc |
Core Main and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Main and Now
The main advantage of trading using opposite Core Main and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Main position performs unexpectedly, Now 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 Now will offset losses from the drop in Now's long position.| Core Main vs. Distribution Solutions Group | Core Main vs. Global Industrial Co | Core Main vs. Applied Industrial Technologies | Core Main vs. BlueLinx 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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