Correlation Between Nova Leap and Pennant

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

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

Diversification Opportunities for Nova Leap and Pennant

-0.01

Correlation Coefficient

Nova Leap  Pennant

Good diversification

The 3 months correlation between Nova and Pennant is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nova Leap Health and Pennant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennant Group and Nova Leap 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 Nova Leap Health are associated (or correlated) with Pennant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennant Group has no effect on the direction of Nova Leap i.e., Nova Leap and Pennant go up and down completely randomly.

Pair Corralation between Nova Leap and Pennant

Assuming the 90 days horizon Nova Leap Health is expected to generate 3.05 times more return on investment than Pennant. However, Nova Leap is 3.05 times more volatile than Pennant Group. It trades about 0.03 of its potential returns per unit of risk. Pennant Group is currently generating about -0.05 per unit of risk. If you would invest  18.00  in Nova Leap Health on September 12, 2024 and sell it today you would lose (1.00) from holding Nova Leap Health or give up 5.56% of portfolio value over 90 days.

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

Nova Leap Health  vs.  Pennant Group

Nova Leap Health

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Leap Health are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nova Leap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pennant Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pennant Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nova Leap and Pennant

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

The idea behind Nova Leap Health and Pennant Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.