Correlation Between Demant AS and NuVasive
Can any of the company-specific risk be diversified away by investing in both Demant AS and NuVasive 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 Demant AS and NuVasive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Demant AS ADR and NuVasive, you can compare the effects of market volatilities on Demant AS and NuVasive 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 Demant AS with a short position of NuVasive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Demant AS and NuVasive.
Diversification Opportunities for Demant AS and NuVasive
Average diversification
The 3 months correlation between Demant and NuVasive is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Demant AS ADR and NuVasive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuVasive and Demant AS 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 Demant AS ADR are associated (or correlated) with NuVasive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuVasive has no effect on the direction of Demant AS i.e., Demant AS and NuVasive go up and down completely randomly.
Pair Corralation between Demant AS and NuVasive
Assuming the 90 days horizon Demant AS ADR is expected to generate 1.07 times more return on investment than NuVasive. However, Demant AS is 1.07 times more volatile than NuVasive. It trades about 0.04 of its potential returns per unit of risk. NuVasive is currently generating about 0.02 per unit of risk. If you would invest 1,363 in Demant AS ADR on August 30, 2024 and sell it today you would earn a total of 523.00 from holding Demant AS ADR or generate 38.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 31.31% |
| Values | Daily Returns |
Demant AS ADR vs. NuVasive
Performance |
| Timeline |
| Demant AS ADR |
| NuVasive |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Demant AS and NuVasive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Demant AS and NuVasive
The main advantage of trading using opposite Demant AS and NuVasive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Demant AS position performs unexpectedly, NuVasive 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 NuVasive will offset losses from the drop in NuVasive's long position.| Demant AS vs. CochLear Ltd ADR | Demant AS vs. GN Store Nord | Demant AS vs. GN Store Nord | Demant AS vs. Siemens Healthineers AG |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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