Correlation Between GODM Investments and Nextgen
Can any of the company-specific risk be diversified away by investing in both GODM Investments and Nextgen 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 GODM Investments and Nextgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GODM Investments and Nextgen, you can compare the effects of market volatilities on GODM Investments and Nextgen 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 GODM Investments with a short position of Nextgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of GODM Investments and Nextgen.
Diversification Opportunities for GODM Investments and Nextgen
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GODM and Nextgen is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding GODM Investments and Nextgen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextgen and GODM Investments 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 GODM Investments are associated (or correlated) with Nextgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextgen has no effect on the direction of GODM Investments i.e., GODM Investments and Nextgen go up and down completely randomly.
Pair Corralation between GODM Investments and Nextgen
Assuming the 90 days trading horizon GODM Investments is expected to generate 0.89 times more return on investment than Nextgen. However, GODM Investments is 1.12 times less risky than Nextgen. It trades about 0.0 of its potential returns per unit of risk. Nextgen is currently generating about -0.08 per unit of risk. If you would invest 4,770 in GODM Investments on September 3, 2024 and sell it today you would lose (2,550) from holding GODM Investments or give up 53.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GODM Investments vs. Nextgen
Performance |
| Timeline |
| GODM Investments |
| Nextgen |
GODM Investments and Nextgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GODM Investments and Nextgen
The main advantage of trading using opposite GODM Investments and Nextgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GODM Investments position performs unexpectedly, Nextgen 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 Nextgen will offset losses from the drop in Nextgen's long position.| GODM Investments vs. Bank Hapoalim | GODM Investments vs. Israel Discount Bank | GODM Investments vs. First International Bank | GODM Investments vs. Elbit Systems |
| Nextgen vs. Bezeq Israeli Telecommunication | Nextgen vs. El Al Israel | Nextgen vs. Bank Leumi Le Israel | Nextgen vs. Elbit Systems |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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