Correlation Between Now and Global Industrial
Can any of the company-specific risk be diversified away by investing in both Now and Global Industrial 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 Global Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Inc and Global Industrial Co, you can compare the effects of market volatilities on Now and Global Industrial 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 Global Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now and Global Industrial.
Diversification Opportunities for Now and Global Industrial
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Now and Global is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc and Global Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Industrial 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 Global Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Industrial has no effect on the direction of Now i.e., Now and Global Industrial go up and down completely randomly.
Pair Corralation between Now and Global Industrial
Given the investment horizon of 90 days Now Inc is expected to generate 0.62 times more return on investment than Global Industrial. However, Now Inc is 1.62 times less risky than Global Industrial. It trades about 0.34 of its potential returns per unit of risk. Global Industrial Co is currently generating about -0.12 per unit of risk. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Now Inc vs. Global Industrial Co
Performance |
| Timeline |
| Now Inc |
| Global Industrial |
Now and Global Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Now and Global Industrial
The main advantage of trading using opposite Now and Global Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now position performs unexpectedly, Global Industrial 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 Global Industrial will offset losses from the drop in Global Industrial's long position.The idea behind Now Inc and Global Industrial Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Global Industrial vs. Distribution Solutions Group | Global Industrial vs. Core Main | Global Industrial vs. Applied Industrial Technologies | Global Industrial 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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