Correlation Between Nova and Entegris
Can any of the company-specific risk be diversified away by investing in both Nova and Entegris 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 Entegris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Entegris, you can compare the effects of market volatilities on Nova and Entegris 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 Entegris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Entegris.
Diversification Opportunities for Nova and Entegris
Good diversification
The 3 months correlation between Nova and Entegris is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris 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 Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of Nova i.e., Nova and Entegris go up and down completely randomly.
Pair Corralation between Nova and Entegris
Given the investment horizon of 90 days Nova is expected to generate 1.4 times more return on investment than Entegris. However, Nova is 1.4 times more volatile than Entegris. It trades about 0.53 of its potential returns per unit of risk. Entegris is currently generating about 0.12 per unit of risk. If you would invest 20,244 in Nova on October 26, 2024 and sell it today you would earn a total of 4,937 from holding Nova or generate 24.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova vs. Entegris
Performance |
| Timeline |
| Nova |
| Entegris |
Nova and Entegris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova and Entegris
The main advantage of trading using opposite Nova and Entegris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova position performs unexpectedly, Entegris 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 Entegris will offset losses from the drop in Entegris' long position.The idea behind Nova and Entegris 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.| Entegris vs. Diodes Incorporated | Entegris vs. Daqo New Energy | Entegris vs. Micron Technology | Entegris vs. MagnaChip Semiconductor |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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