Correlation Between Cooper Metals and Nova Eye
Can any of the company-specific risk be diversified away by investing in both Cooper Metals and Nova Eye 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 Cooper Metals and Nova Eye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cooper Metals and Nova Eye Medical, you can compare the effects of market volatilities on Cooper Metals and Nova Eye 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 Cooper Metals with a short position of Nova Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Metals and Nova Eye.
Diversification Opportunities for Cooper Metals and Nova Eye
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cooper and Nova is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Metals and Nova Eye Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Eye Medical and Cooper Metals 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 Cooper Metals are associated (or correlated) with Nova Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Eye Medical has no effect on the direction of Cooper Metals i.e., Cooper Metals and Nova Eye go up and down completely randomly.
Pair Corralation between Cooper Metals and Nova Eye
Assuming the 90 days trading horizon Cooper Metals is expected to generate 0.49 times more return on investment than Nova Eye. However, Cooper Metals is 2.03 times less risky than Nova Eye. It trades about 0.08 of its potential returns per unit of risk. Nova Eye Medical is currently generating about 0.03 per unit of risk. If you would invest 4.50 in Cooper Metals on September 3, 2024 and sell it today you would earn a total of 0.20 from holding Cooper Metals or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cooper Metals vs. Nova Eye Medical
Performance |
| Timeline |
| Cooper Metals |
| Nova Eye Medical |
Cooper Metals and Nova Eye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cooper Metals and Nova Eye
The main advantage of trading using opposite Cooper Metals and Nova Eye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Metals position performs unexpectedly, Nova Eye 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 Nova Eye will offset losses from the drop in Nova Eye's long position.| Cooper Metals vs. Richmond Vanadium Technology | Cooper Metals vs. Metro Mining | Cooper Metals vs. Ras Technology Holdings | Cooper Metals vs. Dug Technology |
| Nova Eye vs. TTG Fintech | Nova Eye vs. Land Homes Group | Nova Eye vs. Regis Healthcare | Nova Eye vs. Horseshoe Metals |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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