Correlation Between Novanta and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both Novanta and Keysight Technologies 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 Novanta and Keysight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novanta and Keysight Technologies, you can compare the effects of market volatilities on Novanta and Keysight Technologies 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 Novanta with a short position of Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novanta and Keysight Technologies.
Diversification Opportunities for Novanta and Keysight Technologies
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novanta and Keysight is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Novanta and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and Novanta 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 Novanta are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Novanta i.e., Novanta and Keysight Technologies go up and down completely randomly.
Pair Corralation between Novanta and Keysight Technologies
Given the investment horizon of 90 days Novanta is expected to under-perform the Keysight Technologies. In addition to that, Novanta is 1.13 times more volatile than Keysight Technologies. It trades about -0.13 of its total potential returns per unit of risk. Keysight Technologies is currently generating about 0.11 per unit of volatility. If you would invest 16,271 in Keysight Technologies on October 23, 2024 and sell it today you would earn a total of 298.00 from holding Keysight Technologies or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novanta vs. Keysight Technologies
Performance |
| Timeline |
| Novanta |
| Keysight Technologies |
Novanta and Keysight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novanta and Keysight Technologies
The main advantage of trading using opposite Novanta and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novanta position performs unexpectedly, Keysight Technologies 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.| Novanta vs. Spectris plc | Novanta vs. Mesa Laboratories | Novanta vs. ESCO Technologies | Novanta vs. Focus Universal |
| Keysight Technologies vs. Vontier Corp | Keysight Technologies vs. Teledyne Technologies Incorporated | Keysight Technologies vs. ESCO Technologies | Keysight Technologies vs. MKS Instruments |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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