Correlation Between Cencora and Nextplat Corp
Can any of the company-specific risk be diversified away by investing in both Cencora and Nextplat Corp 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 Cencora and Nextplat Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cencora and Nextplat Corp, you can compare the effects of market volatilities on Cencora and Nextplat Corp 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 Cencora with a short position of Nextplat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cencora and Nextplat Corp.
Diversification Opportunities for Cencora and Nextplat Corp
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cencora and Nextplat is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cencora and Nextplat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextplat Corp and Cencora 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 Cencora are associated (or correlated) with Nextplat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextplat Corp has no effect on the direction of Cencora i.e., Cencora and Nextplat Corp go up and down completely randomly.
Pair Corralation between Cencora and Nextplat Corp
Considering the 90-day investment horizon Cencora is expected to generate 0.21 times more return on investment than Nextplat Corp. However, Cencora is 4.75 times less risky than Nextplat Corp. It trades about 0.08 of its potential returns per unit of risk. Nextplat Corp is currently generating about 0.0 per unit of risk. If you would invest 16,789 in Cencora on August 24, 2024 and sell it today you would earn a total of 7,713 from holding Cencora or generate 45.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cencora vs. Nextplat Corp
Performance |
| Timeline |
| Cencora |
| Nextplat Corp |
Cencora and Nextplat Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cencora and Nextplat Corp
The main advantage of trading using opposite Cencora and Nextplat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cencora position performs unexpectedly, Nextplat Corp 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 Nextplat Corp will offset losses from the drop in Nextplat Corp's long position.| Cencora vs. Nextplat Corp | Cencora vs. Meiwu Technology Co | Cencora vs. Viemed Healthcare | Cencora vs. Stratasys |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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