Correlation Between STORE ELECTRONIC and Nokia
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC and Nokia 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 STORE ELECTRONIC and Nokia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and Nokia, you can compare the effects of market volatilities on STORE ELECTRONIC and Nokia 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 STORE ELECTRONIC with a short position of Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and Nokia.
Diversification Opportunities for STORE ELECTRONIC and Nokia
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STORE and Nokia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia and STORE ELECTRONIC 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 STORE ELECTRONIC are associated (or correlated) with Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of STORE ELECTRONIC i.e., STORE ELECTRONIC and Nokia go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and Nokia
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 1.04 times more return on investment than Nokia. However, STORE ELECTRONIC is 1.04 times more volatile than Nokia. It trades about -0.07 of its potential returns per unit of risk. Nokia is currently generating about -0.21 per unit of risk. If you would invest 14,100 in STORE ELECTRONIC on September 5, 2024 and sell it today you would lose (370.00) from holding STORE ELECTRONIC or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. Nokia
Performance |
| Timeline |
| STORE ELECTRONIC |
| Nokia |
STORE ELECTRONIC and Nokia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and Nokia
The main advantage of trading using opposite STORE ELECTRONIC and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC position performs unexpectedly, Nokia 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 Nokia will offset losses from the drop in Nokia's long position.| STORE ELECTRONIC vs. TOTAL GABON | STORE ELECTRONIC vs. Walgreens Boots Alliance | STORE ELECTRONIC vs. Peak Resources Limited |
| Nokia vs. Gladstone Investment | Nokia vs. METHODE ELECTRONICS | Nokia vs. STMICROELECTRONICS | Nokia vs. STORE ELECTRONIC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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