Correlation Between NXT Energy and Global Partners
Can any of the company-specific risk be diversified away by investing in both NXT Energy and Global Partners 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 NXT Energy and Global Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NXT Energy Solutions and Global Partners LP, you can compare the effects of market volatilities on NXT Energy and Global Partners 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 NXT Energy with a short position of Global Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXT Energy and Global Partners.
Diversification Opportunities for NXT Energy and Global Partners
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between NXT and Global is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding NXT Energy Solutions and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP and NXT Energy 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 NXT Energy Solutions are associated (or correlated) with Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of NXT Energy i.e., NXT Energy and Global Partners go up and down completely randomly.
Pair Corralation between NXT Energy and Global Partners
Assuming the 90 days horizon NXT Energy Solutions is expected to generate 72.16 times more return on investment than Global Partners. However, NXT Energy is 72.16 times more volatile than Global Partners LP. It trades about 0.36 of its potential returns per unit of risk. Global Partners LP is currently generating about 0.16 per unit of risk. If you would invest 14.00 in NXT Energy Solutions on December 10, 2024 and sell it today you would earn a total of 11.00 from holding NXT Energy Solutions or generate 78.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXT Energy Solutions vs. Global Partners LP
Performance |
| Timeline |
| NXT Energy Solutions |
| Global Partners LP |
NXT Energy and Global Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXT Energy and Global Partners
The main advantage of trading using opposite NXT Energy and Global Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXT Energy position performs unexpectedly, Global Partners 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 Global Partners will offset losses from the drop in Global Partners' long position.| NXT Energy vs. Dawson Geophysical | NXT Energy vs. Bri Chem Corp | NXT Energy vs. NCS Multistage Holdings | NXT Energy vs. Bristow Group |
| Global Partners vs. Electronic Arts | Global Partners vs. Allient | Global Partners vs. Asure Software | Global Partners vs. ServiceNow |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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