Correlation Between Nokia Corp and Xerox Corp
Can any of the company-specific risk be diversified away by investing in both Nokia Corp and Xerox Corp 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 Nokia Corp and Xerox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nokia Corp ADR and Xerox Corp, you can compare the effects of market volatilities on Nokia Corp and Xerox Corp 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 Nokia Corp with a short position of Xerox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia Corp and Xerox Corp.
Diversification Opportunities for Nokia Corp and Xerox Corp
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nokia and Xerox is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nokia Corp ADR and Xerox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox Corp and Nokia Corp 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 Nokia Corp ADR are associated (or correlated) with Xerox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox Corp has no effect on the direction of Nokia Corp i.e., Nokia Corp and Xerox Corp go up and down completely randomly.
Pair Corralation between Nokia Corp and Xerox Corp
Considering the 90-day investment horizon Nokia Corp ADR is expected to generate 0.73 times more return on investment than Xerox Corp. However, Nokia Corp ADR is 1.37 times less risky than Xerox Corp. It trades about 0.0 of its potential returns per unit of risk. Xerox Corp is currently generating about -0.02 per unit of risk. If you would invest 448.00 in Nokia Corp ADR on August 27, 2024 and sell it today you would lose (30.00) from holding Nokia Corp ADR or give up 6.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nokia Corp ADR vs. Xerox Corp
Performance |
| Timeline |
| Nokia Corp ADR |
| Xerox Corp |
Nokia Corp and Xerox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokia Corp and Xerox Corp
The main advantage of trading using opposite Nokia Corp and Xerox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia Corp position performs unexpectedly, Xerox Corp 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 Xerox Corp will offset losses from the drop in Xerox Corp's long position.| Nokia Corp vs. Ichor Holdings | Nokia Corp vs. Fabrinet | Nokia Corp vs. Hello Group | Nokia Corp vs. Ultra Clean Holdings |
| Xerox Corp vs. D Wave Quantum | Xerox Corp vs. Rigetti Computing | Xerox Corp vs. Cricut Inc | Xerox Corp vs. Quantum Computing |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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