Correlation Between Forge Global and NextTrip
Can any of the company-specific risk be diversified away by investing in both Forge Global and NextTrip 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 Forge Global and NextTrip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forge Global Holdings and NextTrip, you can compare the effects of market volatilities on Forge Global and NextTrip 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 Forge Global with a short position of NextTrip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forge Global and NextTrip.
Diversification Opportunities for Forge Global and NextTrip
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Forge and NextTrip is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Forge Global Holdings and NextTrip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextTrip and Forge Global 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 Forge Global Holdings are associated (or correlated) with NextTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextTrip has no effect on the direction of Forge Global i.e., Forge Global and NextTrip go up and down completely randomly.
Pair Corralation between Forge Global and NextTrip
Given the investment horizon of 90 days Forge Global Holdings is expected to under-perform the NextTrip. But the stock apears to be less risky and, when comparing its historical volatility, Forge Global Holdings is 2.04 times less risky than NextTrip. The stock trades about -0.08 of its potential returns per unit of risk. The NextTrip is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 259.00 in NextTrip on August 28, 2024 and sell it today you would earn a total of 18.00 from holding NextTrip or generate 6.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forge Global Holdings vs. NextTrip
Performance |
| Timeline |
| Forge Global Holdings |
| NextTrip |
Forge Global and NextTrip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forge Global and NextTrip
The main advantage of trading using opposite Forge Global and NextTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forge Global position performs unexpectedly, NextTrip 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 NextTrip will offset losses from the drop in NextTrip's long position.| Forge Global vs. Clearwater Analytics Holdings | Forge Global vs. Expensify | Forge Global vs. Envestnet | Forge Global vs. CS Disco LLC |
| NextTrip vs. Vestis | NextTrip vs. Summit Hotel Properties | NextTrip vs. Herc Holdings | NextTrip vs. Triton International Limited |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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