Correlation Between NewHold Investment and Brilliant Acquisition
Can any of the company-specific risk be diversified away by investing in both NewHold Investment and Brilliant Acquisition 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 NewHold Investment and Brilliant Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewHold Investment Corp and Brilliant Acquisition, you can compare the effects of market volatilities on NewHold Investment and Brilliant Acquisition 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 NewHold Investment with a short position of Brilliant Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewHold Investment and Brilliant Acquisition.
Diversification Opportunities for NewHold Investment and Brilliant Acquisition
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NewHold and Brilliant is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NewHold Investment Corp and Brilliant Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brilliant Acquisition and NewHold Investment 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 NewHold Investment Corp are associated (or correlated) with Brilliant Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brilliant Acquisition has no effect on the direction of NewHold Investment i.e., NewHold Investment and Brilliant Acquisition go up and down completely randomly.
Pair Corralation between NewHold Investment and Brilliant Acquisition
Assuming the 90 days horizon NewHold Investment Corp is expected to generate 7.45 times more return on investment than Brilliant Acquisition. However, NewHold Investment is 7.45 times more volatile than Brilliant Acquisition. It trades about 0.14 of its potential returns per unit of risk. Brilliant Acquisition is currently generating about 0.13 per unit of risk. If you would invest 15.00 in NewHold Investment Corp on September 7, 2024 and sell it today you would lose (13.70) from holding NewHold Investment Corp or give up 91.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 54.55% |
Values | Daily Returns |
NewHold Investment Corp vs. Brilliant Acquisition
Performance |
Timeline |
NewHold Investment Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Brilliant Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NewHold Investment and Brilliant Acquisition Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NewHold Investment and Brilliant Acquisition
The main advantage of trading using opposite NewHold Investment and Brilliant Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewHold Investment position performs unexpectedly, Brilliant Acquisition 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 Brilliant Acquisition will offset losses from the drop in Brilliant Acquisition's long position.NewHold Investment vs. WT Offshore | NewHold Investment vs. Viemed Healthcare | NewHold Investment vs. Tandy Leather Factory | NewHold Investment vs. Teleflex Incorporated |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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