Correlation Between NVE and Renesas Electronics

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

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

Diversification Opportunities for NVE and Renesas Electronics

0.0

Correlation Coefficient

NVE  Renesas Electronics

Pay attention - limited upside

The 3 months correlation between NVE and Renesas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NVE Corp. and Renesas Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics Corp 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics Corp has no effect on the direction of NVE i.e., NVE and Renesas Electronics go up and down completely randomly.

Pair Corralation between NVE and Renesas Electronics

If you would invest  7,765  in NVE Corporation on October 4, 2024 and sell it today you would earn a total of  378.00  from holding NVE Corporation or generate 4.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

NVE Corp.  vs.  Renesas Electronics Corp

NVE Corporation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVE Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, NVE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Renesas Electronics Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renesas Electronics Corp 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 fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NVE and Renesas Electronics

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

The idea behind NVE Corporation and Renesas Electronics Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.