Correlation Between Nervos Network and Highstreet

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

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

Diversification Opportunities for Nervos Network and Highstreet

0.68

Correlation Coefficient

Nervos Network  Highstreet

Poor diversification

The 3 months correlation between Nervos and Highstreet is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nervos Network and Highstreet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highstreet and Nervos Network 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 Nervos Network are associated (or correlated) with Highstreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highstreet has no effect on the direction of Nervos Network i.e., Nervos Network and Highstreet go up and down completely randomly.

Pair Corralation between Nervos Network and Highstreet

Assuming the 90 days trading horizon Nervos Network is expected to generate 4.7 times less return on investment than Highstreet. In addition to that, Nervos Network is 1.04 times more volatile than Highstreet. It trades about 0.04 of its total potential returns per unit of risk. Highstreet is currently generating about 0.22 per unit of volatility. If you would invest  195.00  in Highstreet on January 28, 2024 and sell it today you would earn a total of  199.00  from holding Highstreet or generate 102.05% return on investment over 90 days.

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

Nervos Network  vs.  Highstreet

Nervos Network

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nervos Network are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Nervos Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Highstreet

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Highstreet are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Highstreet exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nervos Network and Highstreet

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

The idea behind Nervos Network and Highstreet 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.