Correlation Between NV5 Global and Tucows

Can any of the company-specific risk be diversified away by investing in both NV5 Global and Tucows 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 NV5 Global and Tucows into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NV5 Global and Tucows Inc, you can compare the effects of market volatilities on NV5 Global and Tucows 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 NV5 Global with a short position of Tucows. Check out your portfolio center. Please also check ongoing floating volatility patterns of NV5 Global and Tucows.

Diversification Opportunities for NV5 Global and Tucows

-0.45

Correlation Coefficient

NV5 Global  Tucows

Very good diversification

The 3 months correlation between NV5 and Tucows is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding NV5 Global and Tucows Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tucows Inc and NV5 Global 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 NV5 Global are associated (or correlated) with Tucows. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tucows Inc has no effect on the direction of NV5 Global i.e., NV5 Global and Tucows go up and down completely randomly.

Pair Corralation between NV5 Global and Tucows

Given the investment horizon of 90 days NV5 Global is expected to generate 2.69 times less return on investment than Tucows. But when comparing it to its historical volatility, NV5 Global is 2.27 times less risky than Tucows. It trades about 0.03 of its potential returns per unit of risk. Tucows Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,630  in Tucows Inc on December 27, 2024 and sell it today you would earn a total of  75.00  from holding Tucows Inc or generate 4.6% return on investment over 90 days.

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

NV5 Global  vs.  Tucows Inc

NV5 Global

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NV5 Global are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, NV5 Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Tucows Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tucows Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Tucows may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NV5 Global and Tucows

The main advantage of trading using opposite NV5 Global and Tucows positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NV5 Global position performs unexpectedly, Tucows 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 Tucows will offset losses from the drop in Tucows' long position.

The idea behind NV5 Global and Tucows Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.