Correlation Between Nova Fund and Oak Harvest

Can any of the company-specific risk be diversified away by investing in both Nova Fund and Oak Harvest 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 Oak Harvest 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 Oak Harvest Longshrt, you can compare the effects of market volatilities on Nova Fund and Oak Harvest 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 Oak Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Fund and Oak Harvest.

Diversification Opportunities for Nova Fund and Oak Harvest

0.9

Correlation Coefficient

Nova Fund  Oak Harvest

Almost no diversification

The 3 months correlation between Nova and Oak is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nova Fund Class and Oak Harvest Longshrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Harvest Longshrt 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 Oak Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Harvest Longshrt has no effect on the direction of Nova Fund i.e., Nova Fund and Oak Harvest go up and down completely randomly.

Pair Corralation between Nova Fund and Oak Harvest

Assuming the 90 days horizon Nova Fund Class is expected to under-perform the Oak Harvest. In addition to that, Nova Fund is 1.85 times more volatile than Oak Harvest Longshrt. It trades about -0.22 of its total potential returns per unit of risk. Oak Harvest Longshrt is currently generating about -0.22 per unit of volatility. If you would invest  1,157  in Oak Harvest Longshrt on October 15, 2024 and sell it today you would lose (39.00) from holding Oak Harvest Longshrt or give up 3.37% of portfolio value over 90 days.

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

Nova Fund Class  vs.  Oak Harvest Longshrt

Nova Fund Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Nova Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oak Harvest Longshrt

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Harvest Longshrt are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Oak Harvest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nova Fund and Oak Harvest

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

The idea behind Nova Fund Class and Oak Harvest Longshrt 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.