Correlation Between NTG Clarity and DIRTT Environmental

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

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

Diversification Opportunities for NTG Clarity and DIRTT Environmental

0.12

Correlation Coefficient

NTG Clarity  DIRTT Environmental

Average diversification

The 3 months correlation between NTG and DIRTT is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NTG Clarity Networks and DIRTT Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIRTT Environmental and NTG Clarity 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 NTG Clarity Networks are associated (or correlated) with DIRTT Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIRTT Environmental has no effect on the direction of NTG Clarity i.e., NTG Clarity and DIRTT Environmental go up and down completely randomly.

Pair Corralation between NTG Clarity and DIRTT Environmental

Assuming the 90 days horizon NTG Clarity Networks is expected to generate 0.98 times more return on investment than DIRTT Environmental. However, NTG Clarity Networks is 1.02 times less risky than DIRTT Environmental. It trades about 0.36 of its potential returns per unit of risk. DIRTT Environmental Solutions is currently generating about 0.03 per unit of risk. If you would invest  107.00  in NTG Clarity Networks on September 26, 2024 and sell it today you would earn a total of  50.00  from holding NTG Clarity Networks or generate 46.73% return on investment over 90 days.

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

NTG Clarity Networks  vs.  DIRTT Environmental Solutions

NTG Clarity Networks

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Clarity Networks are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NTG Clarity showed solid returns over the last few months and may actually be approaching a breakup point.

DIRTT Environmental

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIRTT Environmental Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, DIRTT Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NTG Clarity and DIRTT Environmental

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

The idea behind NTG Clarity Networks and DIRTT Environmental Solutions 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.