Correlation Between Loar Holdings and Novocure

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

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

Diversification Opportunities for Loar Holdings and Novocure

0.64

Correlation Coefficient

Loar Holdings  Novocure

Poor diversification

The 3 months correlation between Loar and Novocure is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Loar Holdings and Novocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novocure and Loar 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 Loar Holdings are associated (or correlated) with Novocure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novocure has no effect on the direction of Loar Holdings i.e., Loar Holdings and Novocure go up and down completely randomly.

Pair Corralation between Loar Holdings and Novocure

Given the investment horizon of 90 days Loar Holdings is expected to generate 0.86 times more return on investment than Novocure. However, Loar Holdings is 1.16 times less risky than Novocure. It trades about -0.05 of its potential returns per unit of risk. Novocure is currently generating about -0.25 per unit of risk. If you would invest  7,443  in Loar Holdings on December 28, 2024 and sell it today you would lose (669.00) from holding Loar Holdings or give up 8.99% of portfolio value over 90 days.

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

Loar Holdings  vs.  Novocure

Loar Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Novocure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novocure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Loar Holdings and Novocure

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

The idea behind Loar Holdings and Novocure 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.