Correlation Between US Nuclear and Coherent

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

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

Diversification Opportunities for US Nuclear and Coherent

0.28

Correlation Coefficient

US Nuclear  Coherent

Modest diversification

The 3 months correlation between UCLE and Coherent is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding US Nuclear Corp and Coherent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherent and US Nuclear 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 US Nuclear Corp are associated (or correlated) with Coherent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherent has no effect on the direction of US Nuclear i.e., US Nuclear and Coherent go up and down completely randomly.

Pair Corralation between US Nuclear and Coherent

Given the investment horizon of 90 days US Nuclear Corp is expected to under-perform the Coherent. In addition to that, US Nuclear is 3.21 times more volatile than Coherent. It trades about -0.14 of its total potential returns per unit of risk. Coherent is currently generating about -0.03 per unit of volatility. If you would invest  10,016  in Coherent on September 29, 2024 and sell it today you would lose (317.00) from holding Coherent or give up 3.16% of portfolio value over 90 days.

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

US Nuclear Corp  vs.  Coherent

US Nuclear Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Nuclear Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, US Nuclear exhibited solid returns over the last few months and may actually be approaching a breakup point.

Coherent

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coherent are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Coherent may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with US Nuclear and Coherent

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

The idea behind US Nuclear Corp and Coherent 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.