Correlation Between Nortech Systems and AstroNova
Can any of the company-specific risk be diversified away by investing in both Nortech Systems and AstroNova 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 Nortech Systems and AstroNova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nortech Systems Incorporated and AstroNova, you can compare the effects of market volatilities on Nortech Systems and AstroNova 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 Nortech Systems with a short position of AstroNova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nortech Systems and AstroNova.
Diversification Opportunities for Nortech Systems and AstroNova
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nortech and AstroNova is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nortech Systems Incorporated and AstroNova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstroNova and Nortech Systems 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 Nortech Systems Incorporated are associated (or correlated) with AstroNova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstroNova has no effect on the direction of Nortech Systems i.e., Nortech Systems and AstroNova go up and down completely randomly.
Pair Corralation between Nortech Systems and AstroNova
Given the investment horizon of 90 days Nortech Systems Incorporated is expected to under-perform the AstroNova. In addition to that, Nortech Systems is 1.1 times more volatile than AstroNova. It trades about -0.08 of its total potential returns per unit of risk. AstroNova is currently generating about -0.04 per unit of volatility. If you would invest 1,421 in AstroNova on October 26, 2024 and sell it today you would lose (141.00) from holding AstroNova or give up 9.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nortech Systems Incorporated vs. AstroNova
Performance |
| Timeline |
| Nortech Systems |
| AstroNova |
Nortech Systems and AstroNova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nortech Systems and AstroNova
The main advantage of trading using opposite Nortech Systems and AstroNova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nortech Systems position performs unexpectedly, AstroNova 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 AstroNova will offset losses from the drop in AstroNova's long position.| Nortech Systems vs. Neuropace | Nortech Systems vs. Electromed | Nortech Systems vs. Orthopediatrics Corp | Nortech Systems vs. SurModics |
| AstroNova vs. Key Tronic | AstroNova vs. Identiv | AstroNova vs. Red Cat Holdings | AstroNova vs. TransAct Technologies Incorporated |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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