Correlation Between Now and 743820AA0

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Can any of the company-specific risk be diversified away by investing in both Now and 743820AA0 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 743820AA0 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Inc and US743820AA01, you can compare the effects of market volatilities on Now and 743820AA0 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 743820AA0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now and 743820AA0.

Diversification Opportunities for Now and 743820AA0

-0.11
  Correlation Coefficient
 Now

Good diversification

The 3 months correlation between Now and 743820AA0 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc and US743820AA01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US743820AA01 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 743820AA0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US743820AA01 has no effect on the direction of Now i.e., Now and 743820AA0 go up and down completely randomly.

Pair Corralation between Now and 743820AA0

Given the investment horizon of 90 days Now Inc is expected to generate 2.57 times more return on investment than 743820AA0. However, Now is 2.57 times more volatile than US743820AA01. It trades about 0.11 of its potential returns per unit of risk. US743820AA01 is currently generating about -0.09 per unit of risk. If you would invest  1,192  in Now Inc on October 25, 2024 and sell it today you would earn a total of  166.00  from holding Now Inc or generate 13.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy86.44%
ValuesDaily Returns

Now Inc  vs.  US743820AA01

 Performance 
       Timeline  
Now Inc 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Now Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Now showed solid returns over the last few months and may actually be approaching a breakup point.
US743820AA01 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days US743820AA01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 743820AA0 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Now and 743820AA0 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Now and 743820AA0

The main advantage of trading using opposite Now and 743820AA0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now position performs unexpectedly, 743820AA0 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 743820AA0 will offset losses from the drop in 743820AA0's long position.
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The idea behind Now Inc and US743820AA01 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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