Correlation Between Bri Chem and NXT Energy
Can any of the company-specific risk be diversified away by investing in both Bri Chem and NXT 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 Bri Chem and NXT Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bri Chem Corp and NXT Energy Solutions, you can compare the effects of market volatilities on Bri Chem and NXT 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 Bri Chem with a short position of NXT Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bri Chem and NXT Energy.
Diversification Opportunities for Bri Chem and NXT Energy
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bri and NXT is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bri Chem Corp and NXT Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXT Energy Solutions and Bri Chem 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 Bri Chem Corp are associated (or correlated) with NXT Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXT Energy Solutions has no effect on the direction of Bri Chem i.e., Bri Chem and NXT Energy go up and down completely randomly.
Pair Corralation between Bri Chem and NXT Energy
Assuming the 90 days horizon Bri Chem Corp is expected to generate 2.08 times more return on investment than NXT Energy. However, Bri Chem is 2.08 times more volatile than NXT Energy Solutions. It trades about 0.13 of its potential returns per unit of risk. NXT Energy Solutions is currently generating about 0.07 per unit of risk. If you would invest 12.00 in Bri Chem Corp on October 26, 2024 and sell it today you would earn a total of 13.00 from holding Bri Chem Corp or generate 108.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bri Chem Corp vs. NXT Energy Solutions
Performance |
| Timeline |
| Bri Chem Corp |
| NXT Energy Solutions |
Bri Chem and NXT Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bri Chem and NXT Energy
The main advantage of trading using opposite Bri Chem and NXT Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bri Chem position performs unexpectedly, NXT 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 NXT Energy will offset losses from the drop in NXT Energy's long position.| Bri Chem vs. Dawson Geophysical | Bri Chem vs. NCS Multistage Holdings | Bri Chem vs. NXT Energy Solutions | Bri Chem vs. Bristow Group |
| NXT Energy vs. Dawson Geophysical | NXT Energy vs. Bri Chem Corp | NXT Energy vs. NCS Multistage Holdings | NXT Energy vs. Bristow Group |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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