Correlation Between City View and Nutranomics

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

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

Diversification Opportunities for City View and Nutranomics

0.45

Correlation Coefficient

City View  Nutranomics

Very weak diversification

The 3 months correlation between City and Nutranomics is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding City View Green and Nutranomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutranomics and City View 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 City View Green are associated (or correlated) with Nutranomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutranomics has no effect on the direction of City View i.e., City View and Nutranomics go up and down completely randomly.

Pair Corralation between City View and Nutranomics

Assuming the 90 days horizon City View is expected to generate 13.96 times less return on investment than Nutranomics. But when comparing it to its historical volatility, City View Green is 14.05 times less risky than Nutranomics. It trades about 0.16 of its potential returns per unit of risk. Nutranomics is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Nutranomics on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Nutranomics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

City View Green  vs.  Nutranomics

City View Green

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in City View Green are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, City View reported solid returns over the last few months and may actually be approaching a breakup point.

Nutranomics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nutranomics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nutranomics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with City View and Nutranomics

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

The idea behind City View Green and Nutranomics 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..