Correlation Between NOV and Compaa Minera

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

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

Diversification Opportunities for NOV and Compaa Minera

-0.54

Correlation Coefficient

NOV  Compaa Minera

Excellent diversification

The 3 months correlation between NOV and Compaa is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding NOV Inc and Compaa Minera Autln in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compaa Minera Autln and NOV 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 NOV Inc are associated (or correlated) with Compaa Minera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compaa Minera Autln has no effect on the direction of NOV i.e., NOV and Compaa Minera go up and down completely randomly.

Pair Corralation between NOV and Compaa Minera

Assuming the 90 days trading horizon NOV Inc is expected to generate 0.83 times more return on investment than Compaa Minera. However, NOV Inc is 1.2 times less risky than Compaa Minera. It trades about 0.0 of its potential returns per unit of risk. Compaa Minera Autln is currently generating about -0.06 per unit of risk. If you would invest  35,293  in NOV Inc on September 24, 2024 and sell it today you would lose (3,049) from holding NOV Inc or give up 8.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

NOV Inc  vs.  Compaa Minera Autln

NOV Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NOV Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, NOV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Compaa Minera Autln

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compaa Minera Autln has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NOV and Compaa Minera

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

The idea behind NOV Inc and Compaa Minera Autln 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.