Correlation Between National Presto and Novocure
Can any of the company-specific risk be diversified away by investing in both National Presto and Novocure 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 National Presto and Novocure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Presto Industries and Novocure, you can compare the effects of market volatilities on National Presto and Novocure 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 National Presto with a short position of Novocure. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Presto and Novocure.
Diversification Opportunities for National Presto and Novocure
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between National and Novocure is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding National Presto Industries and Novocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novocure and National Presto 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 National Presto Industries are associated (or correlated) with Novocure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novocure has no effect on the direction of National Presto i.e., National Presto and Novocure go up and down completely randomly.
Pair Corralation between National Presto and Novocure
Considering the 90-day investment horizon National Presto is expected to generate 3.48 times less return on investment than Novocure. But when comparing it to its historical volatility, National Presto Industries is 7.16 times less risky than Novocure. It trades about 0.54 of its potential returns per unit of risk. Novocure is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,789 in Novocure on September 14, 2024 and sell it today you would earn a total of 1,217 from holding Novocure or generate 68.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Presto Industries vs. Novocure
Performance |
| Timeline |
| National Presto Indu |
| Novocure |
National Presto and Novocure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Presto and Novocure
The main advantage of trading using opposite National Presto and Novocure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Presto position performs unexpectedly, Novocure 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 Novocure will offset losses from the drop in Novocure's long position.| National Presto vs. Novocure | National Presto vs. HubSpot | National Presto vs. DigitalOcean Holdings | National Presto vs. Appian Corp |
| Novocure vs. Globus Medical | Novocure vs. Insulet | Novocure vs. Inspire Medical Systems | Novocure vs. Inari Medical |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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