Correlation Between Flexible Solutions and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and Nextera 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 Flexible Solutions and Nextera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and Nextera Energy, you can compare the effects of market volatilities on Flexible Solutions and Nextera 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 Flexible Solutions with a short position of Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Nextera Energy.
Diversification Opportunities for Flexible Solutions and Nextera Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Flexible and Nextera is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and Nextera Energy go up and down completely randomly.
Pair Corralation between Flexible Solutions and Nextera Energy
Considering the 90-day investment horizon Flexible Solutions International is expected to generate 2.0 times more return on investment than Nextera Energy. However, Flexible Solutions is 2.0 times more volatile than Nextera Energy. It trades about 0.04 of its potential returns per unit of risk. Nextera Energy is currently generating about 0.0 per unit of risk. If you would invest 281.00 in Flexible Solutions International on September 14, 2024 and sell it today you would earn a total of 110.00 from holding Flexible Solutions International or generate 39.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexible Solutions Internation vs. Nextera Energy
Performance |
| Timeline |
| Flexible Solutions |
| Nextera Energy |
Flexible Solutions and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and Nextera Energy
The main advantage of trading using opposite Flexible Solutions and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, Nextera 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| Flexible Solutions vs. LyondellBasell Industries NV | Flexible Solutions vs. Cabot | Flexible Solutions vs. Westlake Chemical | Flexible Solutions vs. Air Products and |
| Nextera Energy vs. Cementos Pacasmayo SAA | Nextera Energy vs. Stepan Company | Nextera Energy vs. IPG Photonics | Nextera Energy vs. Flexible Solutions International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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