Correlation Between Nauticus Robotics and SIFCO Industries

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

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

Diversification Opportunities for Nauticus Robotics and SIFCO Industries

0.6

Correlation Coefficient

Nauticus Robotics  SIFCO Industries

Poor diversification

The 3 months correlation between Nauticus and SIFCO is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nauticus Robotics and SIFCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIFCO Industries and Nauticus Robotics 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 Nauticus Robotics are associated (or correlated) with SIFCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIFCO Industries has no effect on the direction of Nauticus Robotics i.e., Nauticus Robotics and SIFCO Industries go up and down completely randomly.

Pair Corralation between Nauticus Robotics and SIFCO Industries

Given the investment horizon of 90 days Nauticus Robotics is expected to generate 1.83 times more return on investment than SIFCO Industries. However, Nauticus Robotics is 1.83 times more volatile than SIFCO Industries. It trades about -0.04 of its potential returns per unit of risk. SIFCO Industries is currently generating about -0.15 per unit of risk. If you would invest  149.00  in Nauticus Robotics on September 4, 2024 and sell it today you would lose (37.00) from holding Nauticus Robotics or give up 24.83% of portfolio value over 90 days.

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

Nauticus Robotics  vs.  SIFCO Industries

Nauticus Robotics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nauticus Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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.

SIFCO Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIFCO Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nauticus Robotics and SIFCO Industries

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

The idea behind Nauticus Robotics and SIFCO Industries 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.