Correlation Between Stagwell and NESNVX

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

By analyzing existing cross correlation between Stagwell and NESNVX 4 24 SEP 48, you can compare the effects of market volatilities on Stagwell and NESNVX 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 Stagwell with a short position of NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and NESNVX.

Diversification Opportunities for Stagwell and NESNVX

0.15

Correlation Coefficient

Stagwell  NESNVX

Average diversification

The 3 months correlation between Stagwell and NESNVX is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and NESNVX 4 24 SEP 48 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 4 24 and Stagwell 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 Stagwell are associated (or correlated) with NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 4 24 has no effect on the direction of Stagwell i.e., Stagwell and NESNVX go up and down completely randomly.

Pair Corralation between Stagwell and NESNVX

Given the investment horizon of 90 days Stagwell is expected to under-perform the NESNVX. In addition to that, Stagwell is 1.56 times more volatile than NESNVX 4 24 SEP 48. It trades about -0.04 of its total potential returns per unit of risk. NESNVX 4 24 SEP 48 is currently generating about 0.13 per unit of volatility. If you would invest  7,973  in NESNVX 4 24 SEP 48 on December 25, 2024 and sell it today you would earn a total of  736.00  from holding NESNVX 4 24 SEP 48 or generate 9.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.27%
Values	Daily Returns

Stagwell  vs.  NESNVX 4 24 SEP 48

Stagwell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Stagwell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

NESNVX 4 24

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NESNVX 4 24 SEP 48 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, NESNVX sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stagwell and NESNVX

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

The idea behind Stagwell and NESNVX 4 24 SEP 48 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.