Correlation Between Nice and Nova
Can any of the company-specific risk be diversified away by investing in both Nice and Nova 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 Nova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice and Nova, you can compare the effects of market volatilities on Nice and Nova 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 Nova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice and Nova.
Diversification Opportunities for Nice and Nova
Significant diversification
The 3 months correlation between Nice and Nova is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nice and Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova 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 Nova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova has no effect on the direction of Nice i.e., Nice and Nova go up and down completely randomly.
Pair Corralation between Nice and Nova
Assuming the 90 days trading horizon Nice is expected to generate 1.21 times more return on investment than Nova. However, Nice is 1.21 times more volatile than Nova. It trades about -0.05 of its potential returns per unit of risk. Nova is currently generating about -0.11 per unit of risk. If you would invest 6,700,000 in Nice on August 24, 2024 and sell it today you would lose (325,000) from holding Nice or give up 4.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice vs. Nova
Performance |
| Timeline |
| Nice |
| Nova |
Nice and Nova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice and Nova
The main advantage of trading using opposite Nice and Nova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice position performs unexpectedly, Nova 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 Nova will offset losses from the drop in Nova's long position.| Nice vs. Elbit Systems | Nice vs. Tower Semiconductor | Nice vs. Bank Leumi Le Israel | Nice vs. Teva Pharmaceutical Industries |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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