Correlation Between Nova Europe and Echiquier Entrepreneurs

Can any of the company-specific risk be diversified away by investing in both Nova Europe and Echiquier Entrepreneurs 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 Nova Europe and Echiquier Entrepreneurs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nova Europe ISR and Echiquier Entrepreneurs G, you can compare the effects of market volatilities on Nova Europe and Echiquier Entrepreneurs 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 Nova Europe with a short position of Echiquier Entrepreneurs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Europe and Echiquier Entrepreneurs.

Diversification Opportunities for Nova Europe and Echiquier Entrepreneurs

0.71

Correlation Coefficient

Nova Europe  Echiquier Entrepreneurs

Poor diversification

The 3 months correlation between Nova and Echiquier is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nova Europe ISR and Echiquier Entrepreneurs G in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echiquier Entrepreneurs and Nova Europe 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 Nova Europe ISR are associated (or correlated) with Echiquier Entrepreneurs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echiquier Entrepreneurs has no effect on the direction of Nova Europe i.e., Nova Europe and Echiquier Entrepreneurs go up and down completely randomly.

Pair Corralation between Nova Europe and Echiquier Entrepreneurs

Assuming the 90 days trading horizon Nova Europe ISR is expected to under-perform the Echiquier Entrepreneurs. But the fund apears to be less risky and, when comparing its historical volatility, Nova Europe ISR is 1.09 times less risky than Echiquier Entrepreneurs. The fund trades about -0.04 of its potential returns per unit of risk. The Echiquier Entrepreneurs G is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  186,159  in Echiquier Entrepreneurs G on September 22, 2024 and sell it today you would earn a total of  29,170  from holding Echiquier Entrepreneurs G or generate 15.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Nova Europe ISR  vs.  Echiquier Entrepreneurs G

Nova Europe ISR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Europe ISR has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Nova Europe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Echiquier Entrepreneurs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Echiquier Entrepreneurs G has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Echiquier Entrepreneurs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nova Europe and Echiquier Entrepreneurs

The main advantage of trading using opposite Nova Europe and Echiquier Entrepreneurs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Europe position performs unexpectedly, Echiquier Entrepreneurs 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 Echiquier Entrepreneurs will offset losses from the drop in Echiquier Entrepreneurs' long position.

The idea behind Nova Europe ISR and Echiquier Entrepreneurs G pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.