Correlation Between Nova and Opal Balance
Can any of the company-specific risk be diversified away by investing in both Nova and Opal Balance 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 Nova and Opal Balance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Opal Balance, you can compare the effects of market volatilities on Nova and Opal Balance 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 Nova with a short position of Opal Balance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Opal Balance.
Diversification Opportunities for Nova and Opal Balance
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nova and Opal is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Opal Balance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opal Balance and Nova 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 Nova are associated (or correlated) with Opal Balance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opal Balance has no effect on the direction of Nova i.e., Nova and Opal Balance go up and down completely randomly.
Pair Corralation between Nova and Opal Balance
Assuming the 90 days trading horizon Nova is expected to generate 2.06 times more return on investment than Opal Balance. However, Nova is 2.06 times more volatile than Opal Balance. It trades about 0.12 of its potential returns per unit of risk. Opal Balance is currently generating about 0.09 per unit of risk. If you would invest 8,950,000 in Nova on November 22, 2024 and sell it today you would earn a total of 778,000 from holding Nova or generate 8.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Nova vs. Opal Balance
Performance |
| Timeline |
| Nova |
| Opal Balance |
Nova and Opal Balance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova and Opal Balance
The main advantage of trading using opposite Nova and Opal Balance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova position performs unexpectedly, Opal Balance 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 Opal Balance will offset losses from the drop in Opal Balance's long position.The idea behind Nova and Opal Balance 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.| Opal Balance vs. Nawi Brothers Group | Opal Balance vs. EN Shoham Business | Opal Balance vs. Peninsula Group | Opal Balance vs. Shikun Binui |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |