Correlation Between NEXANS and Science Applications
Can any of the company-specific risk be diversified away by investing in both NEXANS and Science Applications 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 NEXANS and Science Applications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXANS and Science Applications International, you can compare the effects of market volatilities on NEXANS and Science Applications 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 NEXANS with a short position of Science Applications. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXANS and Science Applications.
Diversification Opportunities for NEXANS and Science Applications
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NEXANS and Science is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NEXANS and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications and NEXANS 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 NEXANS are associated (or correlated) with Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of NEXANS i.e., NEXANS and Science Applications go up and down completely randomly.
Pair Corralation between NEXANS and Science Applications
Assuming the 90 days trading horizon NEXANS is expected to under-perform the Science Applications. But the stock apears to be less risky and, when comparing its historical volatility, NEXANS is 1.01 times less risky than Science Applications. The stock trades about -0.15 of its potential returns per unit of risk. The Science Applications International is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 11,100 in Science Applications International on September 19, 2024 and sell it today you would lose (400.00) from holding Science Applications International or give up 3.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXANS vs. Science Applications Internati
Performance |
| Timeline |
| NEXANS |
| Science Applications |
NEXANS and Science Applications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXANS and Science Applications
The main advantage of trading using opposite NEXANS and Science Applications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXANS position performs unexpectedly, Science Applications 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 Science Applications will offset losses from the drop in Science Applications' long position.| NEXANS vs. Fidelity National Information | NEXANS vs. Science Applications International | NEXANS vs. National Storage Affiliates | NEXANS vs. PKSHA TECHNOLOGY INC |
| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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