Correlation Between Nordson and Power Solutions
Can any of the company-specific risk be diversified away by investing in both Nordson and Power Solutions 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 Nordson and Power Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordson and Power Solutions International, you can compare the effects of market volatilities on Nordson and Power Solutions 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 Nordson with a short position of Power Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordson and Power Solutions.
Diversification Opportunities for Nordson and Power Solutions
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nordson and Power is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nordson and Power Solutions International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Solutions Inte and Nordson 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 Nordson are associated (or correlated) with Power Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Solutions Inte has no effect on the direction of Nordson i.e., Nordson and Power Solutions go up and down completely randomly.
Pair Corralation between Nordson and Power Solutions
Given the investment horizon of 90 days Nordson is expected to generate 1.71 times less return on investment than Power Solutions. But when comparing it to its historical volatility, Nordson is 3.36 times less risky than Power Solutions. It trades about 0.02 of its potential returns per unit of risk. Power Solutions International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 345.00 in Power Solutions International on September 2, 2024 and sell it today you would lose (30.00) from holding Power Solutions International or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 30.85% |
| Values | Daily Returns |
Nordson vs. Power Solutions International
Performance |
| Timeline |
| Nordson |
| Power Solutions Inte |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nordson and Power Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordson and Power Solutions
The main advantage of trading using opposite Nordson and Power Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordson position performs unexpectedly, Power Solutions 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 Power Solutions will offset losses from the drop in Power Solutions' long position.| Nordson vs. Illinois Tool Works | Nordson vs. Pentair PLC | Nordson vs. Parker Hannifin | Nordson vs. Emerson Electric |
| Power Solutions vs. Chart Industries | Power Solutions vs. Nordson | Power Solutions vs. Helios Technologies | Power Solutions vs. Thermon Group Holdings |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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