Correlation Between NBI Bearings and Lleidanetworks Serveis
Can any of the company-specific risk be diversified away by investing in both NBI Bearings and Lleidanetworks Serveis 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 Lleidanetworks Serveis 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 Lleidanetworks Serveis Telematics, you can compare the effects of market volatilities on NBI Bearings and Lleidanetworks Serveis 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 Lleidanetworks Serveis. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Bearings and Lleidanetworks Serveis.
Diversification Opportunities for NBI Bearings and Lleidanetworks Serveis
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NBI and Lleidanetworks is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NBI Bearings Europe and Lleidanetworks Serveis Telemat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lleidanetworks Serveis 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 Lleidanetworks Serveis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lleidanetworks Serveis has no effect on the direction of NBI Bearings i.e., NBI Bearings and Lleidanetworks Serveis go up and down completely randomly.
Pair Corralation between NBI Bearings and Lleidanetworks Serveis
Assuming the 90 days trading horizon NBI Bearings Europe is expected to generate 0.55 times more return on investment than Lleidanetworks Serveis. However, NBI Bearings Europe is 1.83 times less risky than Lleidanetworks Serveis. It trades about -0.3 of its potential returns per unit of risk. Lleidanetworks Serveis Telematics is currently generating about -0.22 per unit of risk. If you would invest 436.00 in NBI Bearings Europe on September 2, 2024 and sell it today you would lose (36.00) from holding NBI Bearings Europe or give up 8.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBI Bearings Europe vs. Lleidanetworks Serveis Telemat
Performance |
| Timeline |
| NBI Bearings Europe |
| Lleidanetworks Serveis |
NBI Bearings and Lleidanetworks Serveis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBI Bearings and Lleidanetworks Serveis
The main advantage of trading using opposite NBI Bearings and Lleidanetworks Serveis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI Bearings position performs unexpectedly, Lleidanetworks Serveis 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 Lleidanetworks Serveis will offset losses from the drop in Lleidanetworks Serveis' 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 |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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