Correlation Between Spectris Plc and Novanta
Can any of the company-specific risk be diversified away by investing in both Spectris Plc and Novanta 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 Spectris Plc and Novanta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectris plc and Novanta, you can compare the effects of market volatilities on Spectris Plc and Novanta 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 Spectris Plc with a short position of Novanta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectris Plc and Novanta.
Diversification Opportunities for Spectris Plc and Novanta
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spectris and Novanta is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Spectris plc and Novanta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novanta and Spectris Plc 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 Spectris plc are associated (or correlated) with Novanta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novanta has no effect on the direction of Spectris Plc i.e., Spectris Plc and Novanta go up and down completely randomly.
Pair Corralation between Spectris Plc and Novanta
Assuming the 90 days horizon Spectris plc is expected to generate 3.2 times more return on investment than Novanta. However, Spectris Plc is 3.2 times more volatile than Novanta. It trades about 0.19 of its potential returns per unit of risk. Novanta is currently generating about -0.13 per unit of risk. If you would invest 2,997 in Spectris plc on October 22, 2024 and sell it today you would earn a total of 358.00 from holding Spectris plc or generate 11.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectris plc vs. Novanta
Performance |
| Timeline |
| Spectris plc |
| Novanta |
Spectris Plc and Novanta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectris Plc and Novanta
The main advantage of trading using opposite Spectris Plc and Novanta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectris Plc position performs unexpectedly, Novanta 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 Novanta will offset losses from the drop in Novanta's long position.| Spectris Plc vs. Track Group | Spectris Plc vs. Sono Tek Corp | Spectris Plc vs. Mind Technology | Spectris Plc vs. Electro Sensors |
| Novanta vs. Mesa Laboratories | Novanta vs. Itron Inc | Novanta vs. Fortive Corp | Novanta vs. Vishay Precision Group |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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