Correlation Between Electro Sensors and Novanta
Can any of the company-specific risk be diversified away by investing in both Electro Sensors and Novanta 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 Electro Sensors and Novanta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electro Sensors and Novanta, you can compare the effects of market volatilities on Electro Sensors and Novanta 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 Electro Sensors with a short position of Novanta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electro Sensors and Novanta.
Diversification Opportunities for Electro Sensors and Novanta
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electro and Novanta is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Electro Sensors and Novanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novanta and Electro Sensors 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 Electro Sensors are associated (or correlated) with Novanta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novanta has no effect on the direction of Electro Sensors i.e., Electro Sensors and Novanta go up and down completely randomly.
Pair Corralation between Electro Sensors and Novanta
Given the investment horizon of 90 days Electro Sensors is expected to generate 0.79 times more return on investment than Novanta. However, Electro Sensors is 1.26 times less risky than Novanta. It trades about 0.21 of its potential returns per unit of risk. Novanta is currently generating about -0.01 per unit of risk. If you would invest 395.00 in Electro Sensors on August 28, 2024 and sell it today you would earn a total of 39.00 from holding Electro Sensors or generate 9.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Electro Sensors vs. Novanta
Performance |
| Timeline |
| Electro Sensors |
| Novanta |
Electro Sensors and Novanta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electro Sensors and Novanta
The main advantage of trading using opposite Electro Sensors and Novanta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electro Sensors position performs unexpectedly, Novanta 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 Novanta will offset losses from the drop in Novanta's long position.| Electro Sensors vs. Sono Tek Corp | Electro Sensors vs. Vishay Precision Group | Electro Sensors vs. Keyence | Electro Sensors vs. Luna Innovations Incorporated |
| Novanta vs. Mesa Laboratories | Novanta vs. Itron Inc | Novanta vs. Fortive Corp | Novanta vs. Vishay Precision Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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