Correlation Between Entegris and Nova

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

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

Diversification Opportunities for Entegris and Nova

0.06

Correlation Coefficient

Entegris  Nova

Significant diversification

The 3 months correlation between Entegris and Nova is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Entegris and Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova and Entegris 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 Entegris are associated (or correlated) with Nova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova has no effect on the direction of Entegris i.e., Entegris and Nova go up and down completely randomly.

Pair Corralation between Entegris and Nova

Given the investment horizon of 90 days Entegris is expected to generate 3.14 times less return on investment than Nova. But when comparing it to its historical volatility, Entegris is 1.05 times less risky than Nova. It trades about 0.03 of its potential returns per unit of risk. Nova is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9,058  in Nova on November 19, 2024 and sell it today you would earn a total of  17,739  from holding Nova or generate 195.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Entegris  vs.  Nova

Entegris

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Entegris are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Entegris may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Nova

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nova are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain primary indicators, Nova demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Entegris and Nova

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

The idea behind Entegris and Nova 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 Global Correlations module to find global opportunities by holding instruments from different markets.