Correlation Between Eltek and NLIGHT
Can any of the company-specific risk be diversified away by investing in both Eltek and NLIGHT 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 Eltek and NLIGHT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eltek and nLIGHT Inc, you can compare the effects of market volatilities on Eltek and NLIGHT 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 Eltek with a short position of NLIGHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eltek and NLIGHT.
Diversification Opportunities for Eltek and NLIGHT
Good diversification
The 3 months correlation between Eltek and NLIGHT is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eltek and nLIGHT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nLIGHT Inc and Eltek 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 Eltek are associated (or correlated) with NLIGHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nLIGHT Inc has no effect on the direction of Eltek i.e., Eltek and NLIGHT go up and down completely randomly.
Pair Corralation between Eltek and NLIGHT
Given the investment horizon of 90 days Eltek is expected to generate 0.47 times more return on investment than NLIGHT. However, Eltek is 2.14 times less risky than NLIGHT. It trades about -0.02 of its potential returns per unit of risk. nLIGHT Inc is currently generating about -0.03 per unit of risk. If you would invest 1,124 in Eltek on November 6, 2024 and sell it today you would lose (10.00) from holding Eltek or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Eltek vs. nLIGHT Inc
Performance |
| Timeline |
| Eltek |
| nLIGHT Inc |
Eltek and NLIGHT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eltek and NLIGHT
The main advantage of trading using opposite Eltek and NLIGHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eltek position performs unexpectedly, NLIGHT 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 NLIGHT will offset losses from the drop in NLIGHT's long position.| Eltek vs. Methode Electronics | Eltek vs. OSI Systems | Eltek vs. Bel Fuse A | Eltek vs. Richardson Electronics |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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