Correlation Between Nicholas and Large Cap
Can any of the company-specific risk be diversified away by investing in both Nicholas and Large Cap 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 Nicholas and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nicholas Ii Inc and Large Cap Fund, you can compare the effects of market volatilities on Nicholas and Large Cap 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 Nicholas with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicholas and Large Cap.
Diversification Opportunities for Nicholas and Large Cap
Very poor diversification
The 3 months correlation between Nicholas and Large is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nicholas Ii Inc and Large Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Fund and Nicholas 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 Nicholas Ii Inc are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Fund has no effect on the direction of Nicholas i.e., Nicholas and Large Cap go up and down completely randomly.
Pair Corralation between Nicholas and Large Cap
Assuming the 90 days horizon Nicholas Ii Inc is expected to generate 1.22 times more return on investment than Large Cap. However, Nicholas is 1.22 times more volatile than Large Cap Fund. It trades about 0.27 of its potential returns per unit of risk. Large Cap Fund is currently generating about 0.29 per unit of risk. If you would invest 3,395 in Nicholas Ii Inc on August 28, 2024 and sell it today you would earn a total of 211.00 from holding Nicholas Ii Inc or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nicholas Ii Inc vs. Large Cap Fund
Performance |
| Timeline |
| Nicholas Ii |
| Large Cap Fund |
Nicholas and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nicholas and Large Cap
The main advantage of trading using opposite Nicholas and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nicholas position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Nicholas vs. Touchstone Sands Capital | Nicholas vs. Mid Cap Value | Nicholas vs. Fidelity Focused High | Nicholas vs. Harding Loevner International |
| Large Cap vs. Wasatch Large Cap | Large Cap vs. Loomis Sayles Bond | Large Cap vs. Harbor International Fund | Large Cap vs. Equity Series Class |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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