Correlation Between Graco and Nano Nuclear
Can any of the company-specific risk be diversified away by investing in both Graco and Nano Nuclear 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 Graco and Nano Nuclear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graco Inc and Nano Nuclear Energy, you can compare the effects of market volatilities on Graco and Nano Nuclear 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 Graco with a short position of Nano Nuclear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graco and Nano Nuclear.
Diversification Opportunities for Graco and Nano Nuclear
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Graco and Nano is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Nano Nuclear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Nuclear Energy and Graco 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 Graco Inc are associated (or correlated) with Nano Nuclear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Nuclear Energy has no effect on the direction of Graco i.e., Graco and Nano Nuclear go up and down completely randomly.
Pair Corralation between Graco and Nano Nuclear
Considering the 90-day investment horizon Graco is expected to generate 3.04 times less return on investment than Nano Nuclear. But when comparing it to its historical volatility, Graco Inc is 6.84 times less risky than Nano Nuclear. It trades about 0.33 of its potential returns per unit of risk. Nano Nuclear Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,090 in Nano Nuclear Energy on August 30, 2024 and sell it today you would earn a total of 512.00 from holding Nano Nuclear Energy or generate 24.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graco Inc vs. Nano Nuclear Energy
Performance |
| Timeline |
| Graco Inc |
| Nano Nuclear Energy |
Graco and Nano Nuclear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graco and Nano Nuclear
The main advantage of trading using opposite Graco and Nano Nuclear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco position performs unexpectedly, Nano Nuclear 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 Nano Nuclear will offset losses from the drop in Nano Nuclear's long position.The idea behind Graco Inc and Nano Nuclear Energy 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.| Nano Nuclear vs. TFI International | Nano Nuclear vs. Scandinavian Tobacco Group | Nano Nuclear vs. PepsiCo | Nano Nuclear vs. Turning Point Brands |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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