Correlation Between Now and Geospace Technologies
Can any of the company-specific risk be diversified away by investing in both Now and Geospace Technologies 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 Now and Geospace Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Inc and Geospace Technologies, you can compare the effects of market volatilities on Now and Geospace Technologies 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 Now with a short position of Geospace Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now and Geospace Technologies.
Diversification Opportunities for Now and Geospace Technologies
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Now and Geospace is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc and Geospace Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geospace Technologies and Now 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 Now Inc are associated (or correlated) with Geospace Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geospace Technologies has no effect on the direction of Now i.e., Now and Geospace Technologies go up and down completely randomly.
Pair Corralation between Now and Geospace Technologies
Given the investment horizon of 90 days Now is expected to generate 3.61 times less return on investment than Geospace Technologies. But when comparing it to its historical volatility, Now Inc is 1.48 times less risky than Geospace Technologies. It trades about 0.03 of its potential returns per unit of risk. Geospace Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 405.00 in Geospace Technologies on August 26, 2024 and sell it today you would earn a total of 722.00 from holding Geospace Technologies or generate 178.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Now Inc vs. Geospace Technologies
Performance |
| Timeline |
| Now Inc |
| Geospace Technologies |
Now and Geospace Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Now and Geospace Technologies
The main advantage of trading using opposite Now and Geospace Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now position performs unexpectedly, Geospace Technologies 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 Geospace Technologies will offset losses from the drop in Geospace Technologies' long position.| Now vs. Global Industrial Co | Now vs. BlueLinx Holdings | Now vs. WESCO International | Now vs. MSC Industrial Direct |
| Geospace Technologies vs. ProPetro Holding Corp | Geospace Technologies vs. RPC Inc | Geospace Technologies vs. MRC Global | Geospace Technologies vs. Expro Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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