Correlation Between Westport Fuel and NN

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

By analyzing existing cross correlation between Westport Fuel Systems and NN Inc, you can compare the effects of market volatilities on Westport Fuel and NN 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 Westport Fuel with a short position of NN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and NN.

Diversification Opportunities for Westport Fuel and NN

0.69

Correlation Coefficient

Westport Fuel  NN

Poor diversification

The 3 months correlation between Westport and NN is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Westport Fuel 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 Westport Fuel Systems are associated (or correlated) with NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Westport Fuel i.e., Westport Fuel and NN go up and down completely randomly.

Pair Corralation between Westport Fuel and NN

Given the investment horizon of 90 days Westport Fuel Systems is expected to under-perform the NN. But the stock apears to be less risky and, when comparing its historical volatility, Westport Fuel Systems is 1.15 times less risky than NN. The stock trades about -0.03 of its potential returns per unit of risk. The NN Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  127.00  in NN Inc on October 5, 2024 and sell it today you would earn a total of  206.00  from holding NN Inc or generate 162.2% return on investment over 90 days.

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

Westport Fuel Systems  vs.  NN Inc

Westport Fuel Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westport Fuel Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

NN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Westport Fuel and NN

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

The idea behind Westport Fuel Systems and NN Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.