Correlation Between Fanuc and Nuscale Power

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

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

Diversification Opportunities for Fanuc and Nuscale Power

0.27

Correlation Coefficient

Fanuc  Nuscale Power

Modest diversification

The 3 months correlation between Fanuc and Nuscale is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fanuc and Nuscale Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuscale Power Corp and Fanuc 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 Fanuc are associated (or correlated) with Nuscale Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuscale Power Corp has no effect on the direction of Fanuc i.e., Fanuc and Nuscale Power go up and down completely randomly.

Pair Corralation between Fanuc and Nuscale Power

Assuming the 90 days horizon Fanuc is expected to generate 0.22 times more return on investment than Nuscale Power. However, Fanuc is 4.49 times less risky than Nuscale Power. It trades about 0.11 of its potential returns per unit of risk. Nuscale Power Corp is currently generating about 0.02 per unit of risk. If you would invest  1,298  in Fanuc on November 20, 2024 and sell it today you would earn a total of  145.00  from holding Fanuc or generate 11.17% return on investment over 90 days.

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

Fanuc  vs.  Nuscale Power Corp

Fanuc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fanuc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Fanuc may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Nuscale Power Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuscale Power Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, Nuscale Power may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Fanuc and Nuscale Power

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

The idea behind Fanuc and Nuscale Power Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.