Correlation Between US Global and Nextplat Corp
Can any of the company-specific risk be diversified away by investing in both US Global 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 US Global and Nextplat Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Investors and Nextplat Corp, you can compare the effects of market volatilities on US Global 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 US Global with a short position of Nextplat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Nextplat Corp.
Diversification Opportunities for US Global and Nextplat Corp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GROW and Nextplat is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and Nextplat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextplat Corp and US 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 US Global Investors 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 US Global i.e., US Global and Nextplat Corp go up and down completely randomly.
Pair Corralation between US Global and Nextplat Corp
Given the investment horizon of 90 days US Global Investors is expected to generate 0.21 times more return on investment than Nextplat Corp. However, US Global Investors is 4.68 times less risky than Nextplat Corp. It trades about -0.04 of its potential returns per unit of risk. Nextplat Corp is currently generating about -0.14 per unit of risk. If you would invest 247.00 in US Global Investors on August 30, 2024 and sell it today you would lose (4.00) from holding US Global Investors or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Global Investors vs. Nextplat Corp
Performance |
| Timeline |
| US Global Investors |
| Nextplat Corp |
US Global and Nextplat Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Global and Nextplat Corp
The main advantage of trading using opposite US Global and Nextplat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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.The idea behind US Global Investors and Nextplat Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nextplat Corp vs. RenoWorks Software | Nextplat Corp vs. LifeSpeak | Nextplat Corp vs. 01 Communique Laboratory | Nextplat Corp vs. Where Food Comes |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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