Correlation Between Global Tech and NN
Can any of the company-specific risk be diversified away by investing in both Global Tech and NN 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 Global Tech and NN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Tech Industries and NN Inc, you can compare the effects of market volatilities on Global Tech and NN 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 Global Tech with a short position of NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Tech and NN.
Diversification Opportunities for Global Tech and NN
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and NN is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Global Tech Industries and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Global Tech 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 Global Tech Industries are associated (or correlated) with NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Global Tech i.e., Global Tech and NN go up and down completely randomly.
Pair Corralation between Global Tech and NN
Given the investment horizon of 90 days Global Tech Industries is expected to generate 18.14 times more return on investment than NN. However, Global Tech is 18.14 times more volatile than NN Inc. It trades about 0.12 of its potential returns per unit of risk. NN Inc is currently generating about 0.23 per unit of risk. If you would invest 3.00 in Global Tech Industries on September 13, 2024 and sell it today you would lose (1.44) from holding Global Tech Industries or give up 48.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Tech Industries vs. NN Inc
Performance |
| Timeline |
| Global Tech Industries |
| NN Inc |
Global Tech and NN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Tech and NN
The main advantage of trading using opposite Global Tech and NN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Tech position performs unexpectedly, NN 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 NN will offset losses from the drop in NN's long position.| Global Tech vs. HUMANA INC | Global Tech vs. Barloworld Ltd ADR | Global Tech vs. Morningstar Unconstrained Allocation | Global Tech vs. Thrivent High Yield |
| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
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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