Correlation Between NVE and Arteris

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

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

Diversification Opportunities for NVE and Arteris

0.76

Correlation Coefficient

NVE  Arteris

Poor diversification

The 3 months correlation between NVE and Arteris is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding NVE Corp. and Arteris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arteris and NVE 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 NVE Corporation are associated (or correlated) with Arteris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arteris has no effect on the direction of NVE i.e., NVE and Arteris go up and down completely randomly.

Pair Corralation between NVE and Arteris

Given the investment horizon of 90 days NVE Corporation is expected to generate 0.57 times more return on investment than Arteris. However, NVE Corporation is 1.77 times less risky than Arteris. It trades about -0.13 of its potential returns per unit of risk. Arteris is currently generating about -0.08 per unit of risk. If you would invest  8,321  in NVE Corporation on December 25, 2024 and sell it today you would lose (1,591) from holding NVE Corporation or give up 19.12% of portfolio value over 90 days.

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

NVE Corp.  vs.  Arteris

NVE Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVE Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Arteris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arteris 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 forward 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 NVE and Arteris

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

The idea behind NVE Corporation and Arteris 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 Transaction History module to view history of all your transactions and understand their impact on performance.