Correlation Between Nova Fund and Europe 125x

Can any of the company-specific risk be diversified away by investing in both Nova Fund and Europe 125x 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 Fund and Europe 125x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nova Fund Class and Europe 125x Strategy, you can compare the effects of market volatilities on Nova Fund and Europe 125x 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 Fund with a short position of Europe 125x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Fund and Europe 125x.

Diversification Opportunities for Nova Fund and Europe 125x

-0.59

Correlation Coefficient

Nova Fund  Europe 125x

Excellent diversification

The 3 months correlation between Nova and Europe is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nova Fund Class and Europe 125x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europe 125x Strategy and Nova Fund 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 Fund Class are associated (or correlated) with Europe 125x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europe 125x Strategy has no effect on the direction of Nova Fund i.e., Nova Fund and Europe 125x go up and down completely randomly.

Pair Corralation between Nova Fund and Europe 125x

Assuming the 90 days horizon Nova Fund Class is expected to generate 0.48 times more return on investment than Europe 125x. However, Nova Fund Class is 2.1 times less risky than Europe 125x. It trades about -0.06 of its potential returns per unit of risk. Europe 125x Strategy is currently generating about -0.22 per unit of risk. If you would invest  13,493  in Nova Fund Class on September 23, 2024 and sell it today you would lose (251.00) from holding Nova Fund Class or give up 1.86% of portfolio value over 90 days.

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

Nova Fund Class  vs.  Europe 125x Strategy

Nova Fund Class

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Fund Class are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nova Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Europe 125x Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europe 125x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Nova Fund and Europe 125x

The main advantage of trading using opposite Nova Fund and Europe 125x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Fund position performs unexpectedly, Europe 125x 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 Europe 125x will offset losses from the drop in Europe 125x's long position.

The idea behind Nova Fund Class and Europe 125x Strategy 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.