Correlation Between NowVertical and ImagineAR

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

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

Diversification Opportunities for NowVertical and ImagineAR

0.05

Correlation Coefficient

NowVertical  ImagineAR

Significant diversification

The 3 months correlation between NowVertical and ImagineAR is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NowVertical Group and ImagineAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImagineAR and NowVertical 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 NowVertical Group are associated (or correlated) with ImagineAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImagineAR has no effect on the direction of NowVertical i.e., NowVertical and ImagineAR go up and down completely randomly.

Pair Corralation between NowVertical and ImagineAR

Assuming the 90 days horizon NowVertical is expected to generate 1.19 times less return on investment than ImagineAR. In addition to that, NowVertical is 1.06 times more volatile than ImagineAR. It trades about 0.15 of its total potential returns per unit of risk. ImagineAR is currently generating about 0.19 per unit of volatility. If you would invest  2.54  in ImagineAR on September 3, 2024 and sell it today you would earn a total of  4.28  from holding ImagineAR or generate 168.5% return on investment over 90 days.

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

NowVertical Group  vs.  ImagineAR

NowVertical Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NowVertical Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, NowVertical reported solid returns over the last few months and may actually be approaching a breakup point.

ImagineAR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ImagineAR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, ImagineAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NowVertical and ImagineAR

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

The idea behind NowVertical Group and ImagineAR 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.