Correlation Between US Nuclear and Microvision

Can any of the company-specific risk be diversified away by investing in both US Nuclear and Microvision 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 Microvision 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 Microvision, you can compare the effects of market volatilities on US Nuclear and Microvision 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 Microvision. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Nuclear and Microvision.

Diversification Opportunities for US Nuclear and Microvision

-0.26

Correlation Coefficient

US Nuclear  Microvision

Very good diversification

The 3 months correlation between UCLE and Microvision is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding US Nuclear Corp and Microvision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvision 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 Microvision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microvision has no effect on the direction of US Nuclear i.e., US Nuclear and Microvision go up and down completely randomly.

Pair Corralation between US Nuclear and Microvision

Given the investment horizon of 90 days US Nuclear Corp is expected to generate 10.19 times more return on investment than Microvision. However, US Nuclear is 10.19 times more volatile than Microvision. It trades about 0.2 of its potential returns per unit of risk. Microvision is currently generating about 0.11 per unit of risk. If you would invest  1.20  in US Nuclear Corp on September 29, 2024 and sell it today you would earn a total of  6.80  from holding US Nuclear Corp or generate 566.67% return on investment over 90 days.

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

US Nuclear Corp  vs.  Microvision

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.

Microvision

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microvision are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Microvision unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Nuclear and Microvision

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

The idea behind US Nuclear Corp and Microvision 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.