Correlation Between Avantax and Noah Holdings

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

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

Diversification Opportunities for Avantax and Noah Holdings

-0.44

Correlation Coefficient

Avantax  Noah Holdings

Very good diversification

The 3 months correlation between Avantax and Noah is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Avantax and Noah Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noah Holdings and Avantax 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 Avantax are associated (or correlated) with Noah Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noah Holdings has no effect on the direction of Avantax i.e., Avantax and Noah Holdings go up and down completely randomly.

Pair Corralation between Avantax and Noah Holdings

If you would invest  825.00  in Noah Holdings on September 2, 2024 and sell it today you would earn a total of  487.00  from holding Noah Holdings or generate 59.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Avantax  vs.  Noah Holdings

Avantax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Avantax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Noah Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Noah Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Noah Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avantax and Noah Holdings

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

The idea behind Avantax and Noah Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.