Correlation Between Vertiv Holdings and Nexans SA
Can any of the company-specific risk be diversified away by investing in both Vertiv Holdings and Nexans SA 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 Vertiv Holdings and Nexans SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vertiv Holdings Co and Nexans SA, you can compare the effects of market volatilities on Vertiv Holdings and Nexans SA 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 Vertiv Holdings with a short position of Nexans SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertiv Holdings and Nexans SA.
Diversification Opportunities for Vertiv Holdings and Nexans SA
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vertiv and Nexans is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vertiv Holdings Co and Nexans SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexans SA and Vertiv Holdings 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 Vertiv Holdings Co are associated (or correlated) with Nexans SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexans SA has no effect on the direction of Vertiv Holdings i.e., Vertiv Holdings and Nexans SA go up and down completely randomly.
Pair Corralation between Vertiv Holdings and Nexans SA
Considering the 90-day investment horizon Vertiv Holdings Co is expected to generate 1.25 times more return on investment than Nexans SA. However, Vertiv Holdings is 1.25 times more volatile than Nexans SA. It trades about 0.31 of its potential returns per unit of risk. Nexans SA is currently generating about -0.34 per unit of risk. If you would invest 11,774 in Vertiv Holdings Co on October 23, 2024 and sell it today you would earn a total of 2,074 from holding Vertiv Holdings Co or generate 17.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Vertiv Holdings Co vs. Nexans SA
Performance |
| Timeline |
| Vertiv Holdings |
| Nexans SA |
Vertiv Holdings and Nexans SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vertiv Holdings and Nexans SA
The main advantage of trading using opposite Vertiv Holdings and Nexans SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertiv Holdings position performs unexpectedly, Nexans SA 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 Nexans SA will offset losses from the drop in Nexans SA's long position.| Vertiv Holdings vs. nVent Electric PLC | Vertiv Holdings vs. Hubbell | Vertiv Holdings vs. Advanced Energy Industries | Vertiv Holdings vs. Energizer Holdings |
| Nexans SA vs. FREYR Battery SA | Nexans SA vs. nVent Electric PLC | Nexans SA vs. Hubbell | Nexans SA vs. Advanced Energy Industries |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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