Correlation Between Now and Homeland Resources
Can any of the company-specific risk be diversified away by investing in both Now and Homeland Resources 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 Homeland Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Inc and Homeland Resources, you can compare the effects of market volatilities on Now and Homeland Resources 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 Homeland Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now and Homeland Resources.
Diversification Opportunities for Now and Homeland Resources
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Now and Homeland is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc and Homeland Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeland Resources 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 Homeland Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeland Resources has no effect on the direction of Now i.e., Now and Homeland Resources go up and down completely randomly.
Pair Corralation between Now and Homeland Resources
Given the investment horizon of 90 days Now is expected to generate 1.14 times less return on investment than Homeland Resources. But when comparing it to its historical volatility, Now Inc is 5.36 times less risky than Homeland Resources. It trades about 0.28 of its potential returns per unit of risk. Homeland Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Homeland Resources on November 5, 2024 and sell it today you would earn a total of 0.00 from holding Homeland Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Now Inc vs. Homeland Resources
Performance |
| Timeline |
| Now Inc |
| Homeland Resources |
Now and Homeland Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Now and Homeland Resources
The main advantage of trading using opposite Now and Homeland Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now position performs unexpectedly, Homeland Resources 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 Homeland Resources will offset losses from the drop in Homeland Resources' long position.| Now vs. Oil States International | Now vs. Oceaneering International | Now vs. Geospace Technologies | Now vs. Enerflex |
| Homeland Resources vs. Cheetah Mobile | Homeland Resources vs. TrueCar | Homeland Resources vs. Prosus NV ADR | Homeland Resources vs. MediaAlpha |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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