Correlation Between Nextedia and Vergnet
Can any of the company-specific risk be diversified away by investing in both Nextedia and Vergnet 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 Nextedia and Vergnet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextedia and Vergnet, you can compare the effects of market volatilities on Nextedia and Vergnet 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 Nextedia with a short position of Vergnet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextedia and Vergnet.
Diversification Opportunities for Nextedia and Vergnet
Poor diversification
The 3 months correlation between Nextedia and Vergnet is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nextedia and Vergnet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vergnet and Nextedia 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 Nextedia are associated (or correlated) with Vergnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vergnet has no effect on the direction of Nextedia i.e., Nextedia and Vergnet go up and down completely randomly.
Pair Corralation between Nextedia and Vergnet
Assuming the 90 days trading horizon Nextedia is expected to generate 0.4 times more return on investment than Vergnet. However, Nextedia is 2.47 times less risky than Vergnet. It trades about -0.08 of its potential returns per unit of risk. Vergnet is currently generating about -0.37 per unit of risk. If you would invest 70.00 in Nextedia on August 27, 2024 and sell it today you would lose (26.00) from holding Nextedia or give up 37.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextedia vs. Vergnet
Performance |
| Timeline |
| Nextedia |
| Vergnet |
Nextedia and Vergnet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextedia and Vergnet
The main advantage of trading using opposite Nextedia and Vergnet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextedia position performs unexpectedly, Vergnet 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 Vergnet will offset losses from the drop in Vergnet's long position.| Nextedia vs. Sartorius Stedim Biotech | Nextedia vs. Lectra SA | Nextedia vs. Teleperformance SE | Nextedia vs. Trigano SA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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