Correlation Between Nova and Schnapp
Can any of the company-specific risk be diversified away by investing in both Nova and Schnapp 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 Schnapp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Schnapp, you can compare the effects of market volatilities on Nova and Schnapp 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 Schnapp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Schnapp.
Diversification Opportunities for Nova and Schnapp
Very good diversification
The 3 months correlation between Nova and Schnapp is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Schnapp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schnapp 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 Schnapp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schnapp has no effect on the direction of Nova i.e., Nova and Schnapp go up and down completely randomly.
Pair Corralation between Nova and Schnapp
Assuming the 90 days trading horizon Nova is expected to under-perform the Schnapp. In addition to that, Nova is 1.3 times more volatile than Schnapp. It trades about -0.13 of its total potential returns per unit of risk. Schnapp is currently generating about 0.3 per unit of volatility. If you would invest 123,936 in Schnapp on September 13, 2024 and sell it today you would earn a total of 41,764 from holding Schnapp or generate 33.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova vs. Schnapp
Performance |
| Timeline |
| Nova |
| Schnapp |
Nova and Schnapp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova and Schnapp
The main advantage of trading using opposite Nova and Schnapp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova position performs unexpectedly, Schnapp 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 Schnapp will offset losses from the drop in Schnapp's long position.The idea behind Nova and Schnapp 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.| Schnapp vs. Ralco Agencies | Schnapp vs. Nextcom | Schnapp vs. Brimag L | Schnapp vs. Delek Automotive Systems |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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