Correlation Between Now Corp and International Isotopes

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

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

Diversification Opportunities for Now Corp and International Isotopes

-0.47

Correlation Coefficient

Now Corp  International Isotopes

Very good diversification

The 3 months correlation between Now and International is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Now Corp and International Isotopes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Isotopes and Now Corp 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 Now Corp are associated (or correlated) with International Isotopes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Isotopes has no effect on the direction of Now Corp i.e., Now Corp and International Isotopes go up and down completely randomly.

Pair Corralation between Now Corp and International Isotopes

Given the investment horizon of 90 days Now Corp is expected to generate 12.84 times more return on investment than International Isotopes. However, Now Corp is 12.84 times more volatile than International Isotopes. It trades about 0.15 of its potential returns per unit of risk. International Isotopes is currently generating about 0.1 per unit of risk. If you would invest  0.02  in Now Corp on September 29, 2024 and sell it today you would lose (0.01) from holding Now Corp or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	27.42%
Values	Daily Returns

Now Corp  vs.  International Isotopes

Now Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Now Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Now Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

International Isotopes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Isotopes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, International Isotopes is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Now Corp and International Isotopes

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

The idea behind Now Corp and International Isotopes 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.