Correlation Between Envista Holdings and Nextracker

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

By analyzing existing cross correlation between Envista Holdings Corp and Nextracker Class A, you can compare the effects of market volatilities on Envista Holdings and Nextracker 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 Envista Holdings with a short position of Nextracker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Envista Holdings and Nextracker.

Diversification Opportunities for Envista Holdings and Nextracker

0.46

Correlation Coefficient

Envista Holdings  Nextracker

Very weak diversification

The 3 months correlation between Envista and Nextracker is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Envista Holdings Corp and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A and Envista Holdings 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 Envista Holdings Corp are associated (or correlated) with Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of Envista Holdings i.e., Envista Holdings and Nextracker go up and down completely randomly.

Pair Corralation between Envista Holdings and Nextracker

Given the investment horizon of 90 days Envista Holdings Corp is expected to under-perform the Nextracker. But the stock apears to be less risky and, when comparing its historical volatility, Envista Holdings Corp is 1.64 times less risky than Nextracker. The stock trades about -0.05 of its potential returns per unit of risk. The Nextracker Class A is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,046  in Nextracker Class A on October 10, 2024 and sell it today you would earn a total of  1,290  from holding Nextracker Class A or generate 42.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.98%
Values	Daily Returns

Envista Holdings Corp  vs.  Nextracker Class A

Envista Holdings Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Envista Holdings Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Envista Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nextracker Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nextracker Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Nextracker unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Envista Holdings and Nextracker

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

The idea behind Envista Holdings Corp and Nextracker Class A 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.