Correlation Between NEXE Innovations and Packaging Corp
Can any of the company-specific risk be diversified away by investing in both NEXE Innovations and Packaging 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 NEXE Innovations and Packaging Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXE Innovations and Packaging Corp of, you can compare the effects of market volatilities on NEXE Innovations and Packaging 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 NEXE Innovations with a short position of Packaging Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXE Innovations and Packaging Corp.
Diversification Opportunities for NEXE Innovations and Packaging Corp
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NEXE and Packaging is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NEXE Innovations and Packaging Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging Corp and NEXE Innovations 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 NEXE Innovations are associated (or correlated) with Packaging Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging Corp has no effect on the direction of NEXE Innovations i.e., NEXE Innovations and Packaging Corp go up and down completely randomly.
Pair Corralation between NEXE Innovations and Packaging Corp
Assuming the 90 days horizon NEXE Innovations is expected to generate 4.32 times more return on investment than Packaging Corp. However, NEXE Innovations is 4.32 times more volatile than Packaging Corp of. It trades about 0.04 of its potential returns per unit of risk. Packaging Corp of is currently generating about 0.1 per unit of risk. If you would invest 20.00 in NEXE Innovations on September 1, 2024 and sell it today you would earn a total of 8.00 from holding NEXE Innovations or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NEXE Innovations vs. Packaging Corp of
Performance |
| Timeline |
| NEXE Innovations |
| Packaging Corp |
NEXE Innovations and Packaging Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXE Innovations and Packaging Corp
The main advantage of trading using opposite NEXE Innovations and Packaging Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXE Innovations position performs unexpectedly, Packaging 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 Packaging Corp will offset losses from the drop in Packaging Corp's long position.| NEXE Innovations vs. Packaging Corp of | NEXE Innovations vs. International Paper | NEXE Innovations vs. Ball Corporation | NEXE Innovations vs. Amcor plc |
| Packaging Corp vs. Avery Dennison Corp | Packaging Corp vs. O I Glass | Packaging Corp vs. Silgan Holdings | Packaging Corp vs. Sealed Air |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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