Correlation Between Nova and Onto Innovation
Can any of the company-specific risk be diversified away by investing in both Nova and Onto Innovation 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 Onto Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Onto Innovation, you can compare the effects of market volatilities on Nova and Onto Innovation 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 Onto Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Onto Innovation.
Diversification Opportunities for Nova and Onto Innovation
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nova and Onto is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Onto Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onto Innovation 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 Onto Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onto Innovation has no effect on the direction of Nova i.e., Nova and Onto Innovation go up and down completely randomly.
Pair Corralation between Nova and Onto Innovation
Given the investment horizon of 90 days Nova is expected to generate 1.1 times more return on investment than Onto Innovation. However, Nova is 1.1 times more volatile than Onto Innovation. It trades about -0.07 of its potential returns per unit of risk. Onto Innovation is currently generating about -0.26 per unit of risk. If you would invest 18,906 in Nova on August 28, 2024 and sell it today you would lose (1,296) from holding Nova or give up 6.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova vs. Onto Innovation
Performance |
| Timeline |
| Nova |
| Onto Innovation |
Nova and Onto Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova and Onto Innovation
The main advantage of trading using opposite Nova and Onto Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova position performs unexpectedly, Onto Innovation 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 Onto Innovation will offset losses from the drop in Onto Innovation's long position.The idea behind Nova and Onto Innovation 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.| Onto Innovation vs. Camtek | Onto Innovation vs. Amtech Systems | Onto Innovation vs. Veeco Instruments | Onto Innovation vs. Ichor Holdings |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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