Correlation Between Northern Bear and NVR
Can any of the company-specific risk be diversified away by investing in both Northern Bear and NVR 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 Northern Bear and NVR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Bear Plc and NVR Inc, you can compare the effects of market volatilities on Northern Bear and NVR 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 Northern Bear with a short position of NVR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Bear and NVR.
Diversification Opportunities for Northern Bear and NVR
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northern and NVR is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Northern Bear Plc and NVR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVR Inc and Northern Bear 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 Northern Bear Plc are associated (or correlated) with NVR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVR Inc has no effect on the direction of Northern Bear i.e., Northern Bear and NVR go up and down completely randomly.
Pair Corralation between Northern Bear and NVR
Assuming the 90 days trading horizon Northern Bear Plc is expected to generate 1.8 times more return on investment than NVR. However, Northern Bear is 1.8 times more volatile than NVR Inc. It trades about 0.32 of its potential returns per unit of risk. NVR Inc is currently generating about -0.14 per unit of risk. If you would invest 9,050 in Northern Bear Plc on September 6, 2025 and sell it today you would earn a total of 5,900 from holding Northern Bear Plc or generate 65.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Northern Bear Plc vs. NVR Inc
Performance |
| Timeline |
| Northern Bear Plc |
| NVR Inc |
Northern Bear and NVR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Bear and NVR
The main advantage of trading using opposite Northern Bear and NVR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Bear position performs unexpectedly, NVR 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 NVR will offset losses from the drop in NVR's long position.| Northern Bear vs. Capital Metals PLC | Northern Bear vs. Playtech Plc | Northern Bear vs. Critical Metals Plc | Northern Bear vs. Universal Display Corp |
| NVR vs. Ion Beam Applications | NVR vs. CITIC Telecom International | NVR vs. Fidelity National Information | NVR vs. Datalex plc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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