Correlation Between Numinus Wellness and Bombardier

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

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

Diversification Opportunities for Numinus Wellness and Bombardier

-0.41

Correlation Coefficient

Numinus Wellness  Bombardier

Very good diversification

The 3 months correlation between Numinus and Bombardier is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Numinus Wellness and Bombardier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombardier and Numinus Wellness 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 Numinus Wellness are associated (or correlated) with Bombardier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombardier has no effect on the direction of Numinus Wellness i.e., Numinus Wellness and Bombardier go up and down completely randomly.

Pair Corralation between Numinus Wellness and Bombardier

Assuming the 90 days trading horizon Numinus Wellness is expected to generate 1.25 times less return on investment than Bombardier. In addition to that, Numinus Wellness is 2.92 times more volatile than Bombardier. It trades about 0.01 of its total potential returns per unit of risk. Bombardier is currently generating about 0.04 per unit of volatility. If you would invest  6,017  in Bombardier on December 1, 2024 and sell it today you would earn a total of  2,348  from holding Bombardier or generate 39.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Numinus Wellness  vs.  Bombardier

Numinus Wellness

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Numinus Wellness are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Numinus Wellness displayed solid returns over the last few months and may actually be approaching a breakup point.

Bombardier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bombardier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Numinus Wellness and Bombardier

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

The idea behind Numinus Wellness and Bombardier 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.