Correlation Between AKITA Drilling and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Nextera Energy 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 AKITA Drilling and Nextera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Nextera Energy, you can compare the effects of market volatilities on AKITA Drilling and Nextera Energy 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 AKITA Drilling with a short position of Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Nextera Energy.
Diversification Opportunities for AKITA Drilling and Nextera Energy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between AKITA and Nextera is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy and AKITA Drilling 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 AKITA Drilling are associated (or correlated) with Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Nextera Energy go up and down completely randomly.
Pair Corralation between AKITA Drilling and Nextera Energy
Assuming the 90 days horizon AKITA Drilling is expected to under-perform the Nextera Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, AKITA Drilling is 1.61 times less risky than Nextera Energy. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Nextera Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7,161 in Nextera Energy on November 3, 2024 and sell it today you would lose (5.00) from holding Nextera Energy or give up 0.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Nextera Energy
Performance |
| Timeline |
| AKITA Drilling |
| Nextera Energy |
AKITA Drilling and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Nextera Energy
The main advantage of trading using opposite AKITA Drilling and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Nextera Energy 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| AKITA Drilling vs. Cathedral Energy Services | AKITA Drilling vs. Vantage Drilling International | AKITA Drilling vs. Seadrill Limited | AKITA Drilling vs. Noble plc |
| Nextera Energy vs. The Coca Cola | Nextera Energy vs. Ambev SA ADR | Nextera Energy vs. China Resources Beer | Nextera Energy vs. Celsius Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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