Correlation Between Nice and Allot Communications
Can any of the company-specific risk be diversified away by investing in both Nice and Allot Communications 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 Nice and Allot Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice and Allot Communications, you can compare the effects of market volatilities on Nice and Allot Communications 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 Nice with a short position of Allot Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice and Allot Communications.
Diversification Opportunities for Nice and Allot Communications
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nice and Allot is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nice and Allot Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allot Communications and Nice 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 Nice are associated (or correlated) with Allot Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allot Communications has no effect on the direction of Nice i.e., Nice and Allot Communications go up and down completely randomly.
Pair Corralation between Nice and Allot Communications
Assuming the 90 days trading horizon Nice is expected to under-perform the Allot Communications. But the stock apears to be less risky and, when comparing its historical volatility, Nice is 4.36 times less risky than Allot Communications. The stock trades about -0.21 of its potential returns per unit of risk. The Allot Communications is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 177,300 in Allot Communications on October 22, 2024 and sell it today you would earn a total of 105,800 from holding Allot Communications or generate 59.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice vs. Allot Communications
Performance |
| Timeline |
| Nice |
| Allot Communications |
Nice and Allot Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice and Allot Communications
The main advantage of trading using opposite Nice and Allot Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice position performs unexpectedly, Allot Communications 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 Allot Communications will offset losses from the drop in Allot Communications' long position.| Nice vs. Elbit Systems | Nice vs. Tower Semiconductor | Nice vs. Bank Leumi Le Israel | Nice vs. Teva Pharmaceutical Industries |
| Allot Communications vs. Tower Semiconductor | Allot Communications vs. Nova | Allot Communications vs. Nice | Allot Communications vs. AudioCodes |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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