Correlation Between NCS Multistage and NXT Energy
Can any of the company-specific risk be diversified away by investing in both NCS Multistage and NXT 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 NCS Multistage and NXT Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NCS Multistage Holdings and NXT Energy Solutions, you can compare the effects of market volatilities on NCS Multistage and NXT 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 NCS Multistage with a short position of NXT Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCS Multistage and NXT Energy.
Diversification Opportunities for NCS Multistage and NXT Energy
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NCS and NXT is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NCS Multistage Holdings and NXT Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXT Energy Solutions and NCS Multistage 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 NCS Multistage Holdings are associated (or correlated) with NXT Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXT Energy Solutions has no effect on the direction of NCS Multistage i.e., NCS Multistage and NXT Energy go up and down completely randomly.
Pair Corralation between NCS Multistage and NXT Energy
Given the investment horizon of 90 days NCS Multistage is expected to generate 1.53 times less return on investment than NXT Energy. But when comparing it to its historical volatility, NCS Multistage Holdings is 3.38 times less risky than NXT Energy. It trades about 0.31 of its potential returns per unit of risk. NXT Energy Solutions is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 13.00 in NXT Energy Solutions on August 31, 2024 and sell it today you would earn a total of 3.00 from holding NXT Energy Solutions or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NCS Multistage Holdings vs. NXT Energy Solutions
Performance |
| Timeline |
| NCS Multistage Holdings |
| NXT Energy Solutions |
NCS Multistage and NXT Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NCS Multistage and NXT Energy
The main advantage of trading using opposite NCS Multistage and NXT Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NCS Multistage position performs unexpectedly, NXT 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 NXT Energy will offset losses from the drop in NXT Energy's long position.| NCS Multistage vs. Bri Chem Corp | NCS Multistage vs. NXT Energy Solutions | NCS Multistage vs. Bristow Group | NCS Multistage vs. Natural Gas Services |
| NXT Energy vs. Petroleo Brasileiro Petrobras | NXT Energy vs. Equinor ASA ADR | NXT Energy vs. Eni SpA ADR | NXT Energy vs. YPF Sociedad Anonima |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |