Correlation Between IA Invest and NTG Nordic

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

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

Diversification Opportunities for IA Invest and NTG Nordic

-0.39

Correlation Coefficient

IA Invest  NTG Nordic

Very good diversification

The 3 months correlation between IAIACVF and NTG is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding IA Invest Advice and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and IA Invest 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 IA Invest Advice are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of IA Invest i.e., IA Invest and NTG Nordic go up and down completely randomly.

Pair Corralation between IA Invest and NTG Nordic

Assuming the 90 days trading horizon IA Invest Advice is expected to generate 0.54 times more return on investment than NTG Nordic. However, IA Invest Advice is 1.84 times less risky than NTG Nordic. It trades about 0.12 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.11 per unit of risk. If you would invest  12,720  in IA Invest Advice on September 26, 2024 and sell it today you would earn a total of  1,005  from holding IA Invest Advice or generate 7.9% return on investment over 90 days.

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

IA Invest Advice  vs.  NTG Nordic Transport

IA Invest Advice

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IA Invest Advice are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, IA Invest may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NTG Nordic Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with IA Invest and NTG Nordic

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

The idea behind IA Invest Advice and NTG Nordic Transport 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.