Correlation Between NextSource Materials and Senvest Capital
Can any of the company-specific risk be diversified away by investing in both NextSource Materials and Senvest Capital 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 NextSource Materials and Senvest Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextSource Materials and Senvest Capital, you can compare the effects of market volatilities on NextSource Materials and Senvest Capital 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 NextSource Materials with a short position of Senvest Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and Senvest Capital.
Diversification Opportunities for NextSource Materials and Senvest Capital
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NextSource and Senvest is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Senvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senvest Capital and NextSource Materials 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 NextSource Materials are associated (or correlated) with Senvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senvest Capital has no effect on the direction of NextSource Materials i.e., NextSource Materials and Senvest Capital go up and down completely randomly.
Pair Corralation between NextSource Materials and Senvest Capital
Assuming the 90 days trading horizon NextSource Materials is expected to generate 7.63 times more return on investment than Senvest Capital. However, NextSource Materials is 7.63 times more volatile than Senvest Capital. It trades about 0.14 of its potential returns per unit of risk. Senvest Capital is currently generating about 0.48 per unit of risk. If you would invest 55.00 in NextSource Materials on September 13, 2024 and sell it today you would earn a total of 8.00 from holding NextSource Materials or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextSource Materials vs. Senvest Capital
Performance |
| Timeline |
| NextSource Materials |
| Senvest Capital |
NextSource Materials and Senvest Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextSource Materials and Senvest Capital
The main advantage of trading using opposite NextSource Materials and Senvest Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextSource Materials position performs unexpectedly, Senvest Capital 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 Senvest Capital will offset losses from the drop in Senvest Capital's long position.| NextSource Materials vs. Foraco International SA | NextSource Materials vs. Geodrill Limited | NextSource Materials vs. Major Drilling Group | NextSource Materials vs. Bri Chem Corp |
| Senvest Capital vs. Air Canada | Senvest Capital vs. Maple Leaf Foods | Senvest Capital vs. Leons Furniture Limited | Senvest Capital vs. Computer Modelling Group |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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