Correlation Between CLARIVATE PLC and NEC

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

By analyzing existing cross correlation between CLARIVATE PLC and NEC Corporation, you can compare the effects of market volatilities on CLARIVATE PLC and NEC 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 CLARIVATE PLC with a short position of NEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLARIVATE PLC and NEC.

Diversification Opportunities for CLARIVATE PLC and NEC

0.41

Correlation Coefficient

CLARIVATE PLC  NEC

Very weak diversification

The 3 months correlation between CLARIVATE and NEC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CLARIVATE PLC and NEC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEC Corporation and CLARIVATE PLC 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 CLARIVATE PLC are associated (or correlated) with NEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEC Corporation has no effect on the direction of CLARIVATE PLC i.e., CLARIVATE PLC and NEC go up and down completely randomly.

Pair Corralation between CLARIVATE PLC and NEC

Given the investment horizon of 90 days CLARIVATE PLC is expected to under-perform the NEC. But the stock apears to be less risky and, when comparing its historical volatility, CLARIVATE PLC is 1.23 times less risky than NEC. The stock trades about -0.01 of its potential returns per unit of risk. The NEC Corporation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,974  in NEC Corporation on September 26, 2024 and sell it today you would earn a total of  3,673  from holding NEC Corporation or generate 73.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.7%
Values	Daily Returns

CLARIVATE PLC  vs.  NEC Corp.

CLARIVATE PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLARIVATE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NEC Corporation

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days NEC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NEC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CLARIVATE PLC and NEC

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

The idea behind CLARIVATE PLC and NEC Corporation 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.