Correlation Between Novanta and Mind Technology

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

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

Diversification Opportunities for Novanta and Mind Technology

-0.01

Correlation Coefficient

Novanta  Mind Technology

Good diversification

The 3 months correlation between Novanta and Mind is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Novanta and Mind Technology Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Technology Pref and Novanta 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 Novanta are associated (or correlated) with Mind Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Technology Pref has no effect on the direction of Novanta i.e., Novanta and Mind Technology go up and down completely randomly.

Pair Corralation between Novanta and Mind Technology

Given the investment horizon of 90 days Novanta is expected to generate 0.04 times more return on investment than Mind Technology. However, Novanta is 23.28 times less risky than Mind Technology. It trades about -0.03 of its potential returns per unit of risk. Mind Technology Pref is currently generating about -0.51 per unit of risk. If you would invest  17,309  in Novanta on August 31, 2024 and sell it today you would lose (906.00) from holding Novanta or give up 5.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	6.35%
Values	Daily Returns

Novanta  vs.  Mind Technology Pref

Novanta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novanta has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Novanta is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Mind Technology Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mind Technology Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Preferred Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Novanta and Mind Technology

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

The idea behind Novanta and Mind Technology Pref 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.