Correlation Between Shoals Technologies and Nintendo
Can any of the company-specific risk be diversified away by investing in both Shoals Technologies and Nintendo 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 Shoals Technologies and Nintendo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoals Technologies Group and Nintendo Co, you can compare the effects of market volatilities on Shoals Technologies and Nintendo 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 Shoals Technologies with a short position of Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoals Technologies and Nintendo.
Diversification Opportunities for Shoals Technologies and Nintendo
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shoals and Nintendo is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Shoals Technologies Group and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo and Shoals Technologies 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 Shoals Technologies Group are associated (or correlated) with Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of Shoals Technologies i.e., Shoals Technologies and Nintendo go up and down completely randomly.
Pair Corralation between Shoals Technologies and Nintendo
Given the investment horizon of 90 days Shoals Technologies Group is expected to under-perform the Nintendo. In addition to that, Shoals Technologies is 2.41 times more volatile than Nintendo Co. It trades about -0.06 of its total potential returns per unit of risk. Nintendo Co is currently generating about 0.04 per unit of volatility. If you would invest 5,807 in Nintendo Co on October 21, 2024 and sell it today you would earn a total of 86.00 from holding Nintendo Co or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoals Technologies Group vs. Nintendo Co
Performance |
| Timeline |
| Shoals Technologies |
| Nintendo |
Shoals Technologies and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoals Technologies and Nintendo
The main advantage of trading using opposite Shoals Technologies and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoals Technologies position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.| Shoals Technologies vs. Array Technologies | Shoals Technologies vs. Sunnova Energy International | Shoals Technologies vs. Fluence Energy | Shoals Technologies vs. Playtika Holding Corp |
| Nintendo vs. Take Two Interactive Software | Nintendo vs. Electronic Arts | Nintendo vs. UbiSoft Entertainment | Nintendo vs. Square Enix 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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