Correlation Between Fortive Corp and Novanta
Can any of the company-specific risk be diversified away by investing in both Fortive Corp 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 Fortive Corp and Novanta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortive Corp and Novanta, you can compare the effects of market volatilities on Fortive Corp 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 Fortive Corp with a short position of Novanta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortive Corp and Novanta.
Diversification Opportunities for Fortive Corp and Novanta
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortive and Novanta is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fortive Corp and Novanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novanta and Fortive Corp 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 Fortive Corp 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 Fortive Corp i.e., Fortive Corp and Novanta go up and down completely randomly.
Pair Corralation between Fortive Corp and Novanta
Considering the 90-day investment horizon Fortive Corp is expected to generate 0.85 times more return on investment than Novanta. However, Fortive Corp is 1.18 times less risky than Novanta. It trades about 0.49 of its potential returns per unit of risk. Novanta is currently generating about -0.05 per unit of risk. If you would invest 7,441 in Fortive Corp on November 2, 2024 and sell it today you would earn a total of 722.00 from holding Fortive Corp or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortive Corp vs. Novanta
Performance |
| Timeline |
| Fortive Corp |
| Novanta |
Fortive Corp and Novanta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortive Corp and Novanta
The main advantage of trading using opposite Fortive Corp and Novanta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortive Corp 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.| Fortive Corp vs. Vishay Precision Group | Fortive Corp vs. Sensata Technologies Holding | Fortive Corp vs. Badger Meter | Fortive Corp vs. Trimble |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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