Correlation Between Nidec and ITT
Can any of the company-specific risk be diversified away by investing in both Nidec and ITT 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 Nidec and ITT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nidec and ITT Inc, you can compare the effects of market volatilities on Nidec and ITT 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 Nidec with a short position of ITT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nidec and ITT.
Diversification Opportunities for Nidec and ITT
Very good diversification
The 3 months correlation between Nidec and ITT is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nidec and ITT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITT Inc and Nidec 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 Nidec are associated (or correlated) with ITT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITT Inc has no effect on the direction of Nidec i.e., Nidec and ITT go up and down completely randomly.
Pair Corralation between Nidec and ITT
Assuming the 90 days horizon Nidec is expected to generate 12.39 times more return on investment than ITT. However, Nidec is 12.39 times more volatile than ITT Inc. It trades about 0.08 of its potential returns per unit of risk. ITT Inc is currently generating about 0.09 per unit of risk. If you would invest 2,756 in Nidec on August 29, 2024 and sell it today you would lose (1,000.00) from holding Nidec or give up 36.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nidec vs. ITT Inc
Performance |
| Timeline |
| Nidec |
| ITT Inc |
Nidec and ITT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nidec and ITT
The main advantage of trading using opposite Nidec and ITT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nidec position performs unexpectedly, ITT 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 ITT will offset losses from the drop in ITT's long position.| Nidec vs. Daifuku Co | Nidec vs. Eaton PLC | Nidec vs. Yokogawa Electric Corp | Nidec vs. Brewbilt Manufacturing |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |