Correlation Between Iargento and Nice

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

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

Diversification Opportunities for Iargento and Nice

-0.13

Correlation Coefficient

Iargento  Nice

Good diversification

The 3 months correlation between Iargento and Nice is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Iargento Hi Tech and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice and Iargento 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 Iargento Hi Tech are associated (or correlated) with Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of Iargento i.e., Iargento and Nice go up and down completely randomly.

Pair Corralation between Iargento and Nice

Assuming the 90 days trading horizon Iargento Hi Tech is expected to generate 36.11 times more return on investment than Nice. However, Iargento is 36.11 times more volatile than Nice. It trades about 0.07 of its potential returns per unit of risk. Nice is currently generating about 0.01 per unit of risk. If you would invest  23,210  in Iargento Hi Tech on September 12, 2024 and sell it today you would lose (14,580) from holding Iargento Hi Tech or give up 62.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.74%
Values	Daily Returns

Iargento Hi Tech  vs.  Nice

Iargento Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nice

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nice are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nice sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iargento and Nice

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

The idea behind Iargento Hi Tech and Nice 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.