Correlation Between Cosmos Group and Nicholas Financial
Can any of the company-specific risk be diversified away by investing in both Cosmos Group and Nicholas Financial 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 Cosmos Group and Nicholas Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmos Group Holdings and Nicholas Financial, you can compare the effects of market volatilities on Cosmos Group and Nicholas Financial 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 Cosmos Group with a short position of Nicholas Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos Group and Nicholas Financial.
Diversification Opportunities for Cosmos Group and Nicholas Financial
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cosmos and Nicholas is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos Group Holdings and Nicholas Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Financial and Cosmos Group 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 Cosmos Group Holdings are associated (or correlated) with Nicholas Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Financial has no effect on the direction of Cosmos Group i.e., Cosmos Group and Nicholas Financial go up and down completely randomly.
Pair Corralation between Cosmos Group and Nicholas Financial
Given the investment horizon of 90 days Cosmos Group Holdings is expected to generate 67.34 times more return on investment than Nicholas Financial. However, Cosmos Group is 67.34 times more volatile than Nicholas Financial. It trades about 0.15 of its potential returns per unit of risk. Nicholas Financial is currently generating about -0.02 per unit of risk. If you would invest 0.17 in Cosmos Group Holdings on August 27, 2024 and sell it today you would lose (0.17) from holding Cosmos Group Holdings or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 83.81% |
| Values | Daily Returns |
Cosmos Group Holdings vs. Nicholas Financial
Performance |
| Timeline |
| Cosmos Group Holdings |
| Nicholas Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Cosmos Group and Nicholas Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmos Group and Nicholas Financial
The main advantage of trading using opposite Cosmos Group and Nicholas Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos Group position performs unexpectedly, Nicholas Financial 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 Nicholas Financial will offset losses from the drop in Nicholas Financial's long position.| Cosmos Group vs. Element Solutions | Cosmos Group vs. Orion Engineered Carbons | Cosmos Group vs. Minerals Technologies | Cosmos Group vs. Ingevity Corp |
| Nicholas Financial vs. Regional Management Corp | Nicholas Financial vs. Orix Corp Ads | Nicholas Financial vs. FirstCash | Nicholas Financial vs. Finance of America |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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