Correlation Between Converge Technology and Nickel Creek
Can any of the company-specific risk be diversified away by investing in both Converge Technology and Nickel Creek 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 Converge Technology and Nickel Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Converge Technology Solutions and Nickel Creek Platinum, you can compare the effects of market volatilities on Converge Technology and Nickel Creek 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 Converge Technology with a short position of Nickel Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Technology and Nickel Creek.
Diversification Opportunities for Converge Technology and Nickel Creek
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Converge and Nickel is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Converge Technology Solutions and Nickel Creek Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Creek Platinum and Converge Technology 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 Converge Technology Solutions are associated (or correlated) with Nickel Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Creek Platinum has no effect on the direction of Converge Technology i.e., Converge Technology and Nickel Creek go up and down completely randomly.
Pair Corralation between Converge Technology and Nickel Creek
Assuming the 90 days trading horizon Converge Technology Solutions is expected to under-perform the Nickel Creek. But the stock apears to be less risky and, when comparing its historical volatility, Converge Technology Solutions is 6.37 times less risky than Nickel Creek. The stock trades about -0.08 of its potential returns per unit of risk. The Nickel Creek Platinum is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 200.00 in Nickel Creek Platinum on August 24, 2024 and sell it today you would lose (116.00) from holding Nickel Creek Platinum or give up 58.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Converge Technology Solutions vs. Nickel Creek Platinum
Performance |
| Timeline |
| Converge Technology |
| Nickel Creek Platinum |
Converge Technology and Nickel Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Converge Technology and Nickel Creek
The main advantage of trading using opposite Converge Technology and Nickel Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Technology position performs unexpectedly, Nickel Creek 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 Nickel Creek will offset losses from the drop in Nickel Creek's long position.| Converge Technology vs. Nickel Creek Platinum | Converge Technology vs. Canlan Ice Sports | Converge Technology vs. Forsys Metals Corp | Converge Technology vs. Electra Battery Materials |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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