Correlation Between Westport Fuel and NN
Can any of the company-specific risk be diversified away by investing in both Westport Fuel and NN 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 Westport Fuel and NN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westport Fuel Systems and NN Inc, you can compare the effects of market volatilities on Westport Fuel and NN 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 Westport Fuel with a short position of NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and NN.
Diversification Opportunities for Westport Fuel and NN
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Westport and NN is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Westport Fuel 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 Westport Fuel Systems are associated (or correlated) with NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Westport Fuel i.e., Westport Fuel and NN go up and down completely randomly.
Pair Corralation between Westport Fuel and NN
Given the investment horizon of 90 days Westport Fuel Systems is expected to generate 0.7 times more return on investment than NN. However, Westport Fuel Systems is 1.43 times less risky than NN. It trades about 0.21 of its potential returns per unit of risk. NN Inc is currently generating about 0.03 per unit of risk. If you would invest 384.00 in Westport Fuel Systems on November 2, 2024 and sell it today you would earn a total of 59.00 from holding Westport Fuel Systems or generate 15.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westport Fuel Systems vs. NN Inc
Performance |
| Timeline |
| Westport Fuel Systems |
| NN Inc |
Westport Fuel and NN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westport Fuel and NN
The main advantage of trading using opposite Westport Fuel and NN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel position performs unexpectedly, NN 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 NN will offset losses from the drop in NN's long position.| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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