Correlation Between NuVim and Grand Havana
Can any of the company-specific risk be diversified away by investing in both NuVim and Grand Havana 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 NuVim and Grand Havana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NuVim Inc and Grand Havana, you can compare the effects of market volatilities on NuVim and Grand Havana 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 NuVim with a short position of Grand Havana. Check out your portfolio center. Please also check ongoing floating volatility patterns of NuVim and Grand Havana.
Diversification Opportunities for NuVim and Grand Havana
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NuVim and Grand is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NuVim Inc and Grand Havana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Havana and NuVim 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 NuVim Inc are associated (or correlated) with Grand Havana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Havana has no effect on the direction of NuVim i.e., NuVim and Grand Havana go up and down completely randomly.
Pair Corralation between NuVim and Grand Havana
Given the investment horizon of 90 days NuVim Inc is expected to generate 0.94 times more return on investment than Grand Havana. However, NuVim Inc is 1.06 times less risky than Grand Havana. It trades about 0.02 of its potential returns per unit of risk. Grand Havana is currently generating about 0.01 per unit of risk. If you would invest 0.60 in NuVim Inc on September 2, 2024 and sell it today you would lose (0.20) from holding NuVim Inc or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NuVim Inc vs. Grand Havana
Performance |
| Timeline |
| NuVim Inc |
| Grand Havana |
NuVim and Grand Havana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NuVim and Grand Havana
The main advantage of trading using opposite NuVim and Grand Havana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NuVim position performs unexpectedly, Grand Havana 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 Grand Havana will offset losses from the drop in Grand Havana's long position.The idea behind NuVim Inc and Grand Havana pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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