Correlation Between NLIGHT and Everspin Technologies
Can any of the company-specific risk be diversified away by investing in both NLIGHT and Everspin Technologies 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 NLIGHT and Everspin Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between nLIGHT Inc and Everspin Technologies, you can compare the effects of market volatilities on NLIGHT and Everspin Technologies 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 NLIGHT with a short position of Everspin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NLIGHT and Everspin Technologies.
Diversification Opportunities for NLIGHT and Everspin Technologies
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NLIGHT and Everspin is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding nLIGHT Inc and Everspin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everspin Technologies and NLIGHT 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 nLIGHT Inc are associated (or correlated) with Everspin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everspin Technologies has no effect on the direction of NLIGHT i.e., NLIGHT and Everspin Technologies go up and down completely randomly.
Pair Corralation between NLIGHT and Everspin Technologies
Given the investment horizon of 90 days nLIGHT Inc is expected to generate 1.37 times more return on investment than Everspin Technologies. However, NLIGHT is 1.37 times more volatile than Everspin Technologies. It trades about 0.01 of its potential returns per unit of risk. Everspin Technologies is currently generating about 0.0 per unit of risk. If you would invest 1,354 in nLIGHT Inc on November 6, 2024 and sell it today you would lose (237.00) from holding nLIGHT Inc or give up 17.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
nLIGHT Inc vs. Everspin Technologies
Performance |
| Timeline |
| nLIGHT Inc |
| Everspin Technologies |
NLIGHT and Everspin Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NLIGHT and Everspin Technologies
The main advantage of trading using opposite NLIGHT and Everspin Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NLIGHT position performs unexpectedly, Everspin Technologies 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 Everspin Technologies will offset losses from the drop in Everspin Technologies' long position.The idea behind nLIGHT Inc and Everspin Technologies 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.| Everspin Technologies vs. MACOM Technology Solutions | Everspin Technologies vs. Power Integrations | Everspin Technologies vs. Diodes Incorporated | Everspin Technologies vs. CEVA Inc |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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