Correlation Between Iwatani and NTG Nordic

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

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

Diversification Opportunities for Iwatani and NTG Nordic

0.56

Correlation Coefficient

Iwatani  NTG Nordic

Very weak diversification

The 3 months correlation between Iwatani and NTG is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Iwatani and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and Iwatani 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 Iwatani are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Iwatani i.e., Iwatani and NTG Nordic go up and down completely randomly.

Pair Corralation between Iwatani and NTG Nordic

Assuming the 90 days trading horizon Iwatani is expected to under-perform the NTG Nordic. But the stock apears to be less risky and, when comparing its historical volatility, Iwatani is 1.34 times less risky than NTG Nordic. The stock trades about -0.2 of its potential returns per unit of risk. The NTG Nordic Transport is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  3,965  in NTG Nordic Transport on September 19, 2024 and sell it today you would lose (485.00) from holding NTG Nordic Transport or give up 12.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Iwatani  vs.  NTG Nordic Transport

Iwatani

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iwatani has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NTG Nordic Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Iwatani and NTG Nordic

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

The idea behind Iwatani and NTG Nordic Transport 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.