Correlation Between Nauticus Robotics and Loar Holdings

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

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

Diversification Opportunities for Nauticus Robotics and Loar Holdings

-0.35

Correlation Coefficient

Nauticus Robotics  Loar Holdings

Very good diversification

The 3 months correlation between Nauticus and Loar is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nauticus Robotics and Loar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loar Holdings and Nauticus Robotics 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 Nauticus Robotics are associated (or correlated) with Loar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loar Holdings has no effect on the direction of Nauticus Robotics i.e., Nauticus Robotics and Loar Holdings go up and down completely randomly.

Pair Corralation between Nauticus Robotics and Loar Holdings

Assuming the 90 days horizon Nauticus Robotics is expected to generate 1.59 times less return on investment than Loar Holdings. In addition to that, Nauticus Robotics is 2.53 times more volatile than Loar Holdings. It trades about 0.03 of its total potential returns per unit of risk. Loar Holdings is currently generating about 0.12 per unit of volatility. If you would invest  2,800  in Loar Holdings on September 14, 2024 and sell it today you would earn a total of  5,132  from holding Loar Holdings or generate 183.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	41.75%
Values	Daily Returns

Nauticus Robotics  vs.  Loar Holdings

Nauticus Robotics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nauticus Robotics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Nauticus Robotics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Loar Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loar Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Loar Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nauticus Robotics and Loar Holdings

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

The idea behind Nauticus Robotics and Loar Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.