Correlation Between Ichor Holdings and Nova

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

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

Diversification Opportunities for Ichor Holdings and Nova

-0.36

Correlation Coefficient

Ichor Holdings  Nova

Very good diversification

The 3 months correlation between Ichor and Nova is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ichor Holdings and Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova and Ichor Holdings 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 Ichor Holdings 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 Ichor Holdings i.e., Ichor Holdings and Nova go up and down completely randomly.

Pair Corralation between Ichor Holdings and Nova

Given the investment horizon of 90 days Ichor Holdings is expected to generate 6.87 times less return on investment than Nova. In addition to that, Ichor Holdings is 1.11 times more volatile than Nova. It trades about 0.01 of its total potential returns per unit of risk. Nova is currently generating about 0.09 per unit of volatility. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ichor Holdings  vs.  Nova

Ichor Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ichor Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical indicators, Ichor Holdings 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 Ichor Holdings and Nova

The main advantage of trading using opposite Ichor Holdings and Nova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ichor Holdings 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 Ichor Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.