Correlation Between NLIGHT and Smart Global
Can any of the company-specific risk be diversified away by investing in both NLIGHT and Smart Global 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 Smart Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between nLIGHT Inc and Smart Global Holdings, you can compare the effects of market volatilities on NLIGHT and Smart Global 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 Smart Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of NLIGHT and Smart Global.
Diversification Opportunities for NLIGHT and Smart Global
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between NLIGHT and Smart is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding nLIGHT Inc and Smart Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Global Holdings 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 Smart Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Global Holdings has no effect on the direction of NLIGHT i.e., NLIGHT and Smart Global go up and down completely randomly.
Pair Corralation between NLIGHT and Smart Global
If you would invest 2,041 in Smart Global Holdings on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Smart Global Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
nLIGHT Inc vs. Smart Global Holdings
Performance |
| Timeline |
| nLIGHT Inc |
| Smart Global Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NLIGHT and Smart Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NLIGHT and Smart Global
The main advantage of trading using opposite NLIGHT and Smart Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NLIGHT position performs unexpectedly, Smart Global 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 Smart Global will offset losses from the drop in Smart Global's long position.The idea behind nLIGHT Inc and Smart Global Holdings 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.| Smart Global vs. Silicon Motion Technology | Smart Global vs. MACOM Technology Solutions | Smart Global vs. Semtech | Smart Global vs. Alpha and Omega |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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