Correlation Between NBI Bearings and Izertis Sa
Can any of the company-specific risk be diversified away by investing in both NBI Bearings and Izertis Sa 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 NBI Bearings and Izertis Sa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NBI Bearings Europe and Izertis Sa, you can compare the effects of market volatilities on NBI Bearings and Izertis Sa 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 NBI Bearings with a short position of Izertis Sa. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Bearings and Izertis Sa.
Diversification Opportunities for NBI Bearings and Izertis Sa
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NBI and Izertis is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding NBI Bearings Europe and Izertis Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Izertis Sa and NBI Bearings 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 NBI Bearings Europe are associated (or correlated) with Izertis Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Izertis Sa has no effect on the direction of NBI Bearings i.e., NBI Bearings and Izertis Sa go up and down completely randomly.
Pair Corralation between NBI Bearings and Izertis Sa
Assuming the 90 days trading horizon NBI Bearings Europe is expected to under-perform the Izertis Sa. In addition to that, NBI Bearings is 2.27 times more volatile than Izertis Sa. It trades about -0.3 of its total potential returns per unit of risk. Izertis Sa is currently generating about -0.16 per unit of volatility. If you would invest 996.00 in Izertis Sa on September 2, 2024 and sell it today you would lose (20.00) from holding Izertis Sa or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBI Bearings Europe vs. Izertis Sa
Performance |
| Timeline |
| NBI Bearings Europe |
| Izertis Sa |
NBI Bearings and Izertis Sa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBI Bearings and Izertis Sa
The main advantage of trading using opposite NBI Bearings and Izertis Sa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI Bearings position performs unexpectedly, Izertis Sa 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 Izertis Sa will offset losses from the drop in Izertis Sa's long position.| NBI Bearings vs. All Iron Re | NBI Bearings vs. Labiana Health SA | NBI Bearings vs. Home Capital Rentals | NBI Bearings vs. NH Hoteles |
| Izertis Sa vs. Arteche Lantegi Elkartea | Izertis Sa vs. NH Hoteles | Izertis Sa vs. Naturhouse Health SA | Izertis Sa vs. Tier1 Technology SA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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