Correlation Between Big Tech and Nextage Therapeutics
Can any of the company-specific risk be diversified away by investing in both Big Tech and Nextage Therapeutics 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 Big Tech and Nextage Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Tech 50 and Nextage Therapeutics, you can compare the effects of market volatilities on Big Tech and Nextage Therapeutics 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 Big Tech with a short position of Nextage Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Tech and Nextage Therapeutics.
Diversification Opportunities for Big Tech and Nextage Therapeutics
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Big and Nextage is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Big Tech 50 and Nextage Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextage Therapeutics and Big Tech 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 Big Tech 50 are associated (or correlated) with Nextage Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextage Therapeutics has no effect on the direction of Big Tech i.e., Big Tech and Nextage Therapeutics go up and down completely randomly.
Pair Corralation between Big Tech and Nextage Therapeutics
Assuming the 90 days trading horizon Big Tech 50 is expected to under-perform the Nextage Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Big Tech 50 is 3.16 times less risky than Nextage Therapeutics. The stock trades about -0.01 of its potential returns per unit of risk. The Nextage Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,500 in Nextage Therapeutics on September 12, 2024 and sell it today you would earn a total of 2,260 from holding Nextage Therapeutics or generate 41.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Tech 50 vs. Nextage Therapeutics
Performance |
| Timeline |
| Big Tech 50 |
| Nextage Therapeutics |
Big Tech and Nextage Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Tech and Nextage Therapeutics
The main advantage of trading using opposite Big Tech and Nextage Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Tech position performs unexpectedly, Nextage Therapeutics 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 Nextage Therapeutics will offset losses from the drop in Nextage Therapeutics' long position.| Big Tech vs. Altshuler Shaham Financial | Big Tech vs. Meitav Dash Investments | Big Tech vs. Mivtach Shamir | Big Tech vs. YD More Investments |
| Nextage Therapeutics vs. Ram On Investments and | Nextage Therapeutics vs. Imed Infinity Medical Limited | Nextage Therapeutics vs. Tower Semiconductor | Nextage Therapeutics vs. Isras Investment |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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