Correlation Between NXT Energy and Loomis AB
Can any of the company-specific risk be diversified away by investing in both NXT Energy and Loomis AB 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 Loomis AB 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 Loomis AB, you can compare the effects of market volatilities on NXT Energy and Loomis AB 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 Loomis AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXT Energy and Loomis AB.
Diversification Opportunities for NXT Energy and Loomis AB
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NXT and Loomis is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding NXT Energy Solutions and Loomis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis AB 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 Loomis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis AB has no effect on the direction of NXT Energy i.e., NXT Energy and Loomis AB go up and down completely randomly.
Pair Corralation between NXT Energy and Loomis AB
Assuming the 90 days horizon NXT Energy Solutions is expected to generate 4.2 times more return on investment than Loomis AB. However, NXT Energy is 4.2 times more volatile than Loomis AB. It trades about 0.05 of its potential returns per unit of risk. Loomis AB is currently generating about 0.07 per unit of risk. If you would invest 15.00 in NXT Energy Solutions on September 14, 2024 and sell it today you would lose (1.00) from holding NXT Energy Solutions or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 63.71% |
| Values | Daily Returns |
NXT Energy Solutions vs. Loomis AB
Performance |
| Timeline |
| NXT Energy Solutions |
| Loomis AB |
NXT Energy and Loomis AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXT Energy and Loomis AB
The main advantage of trading using opposite NXT Energy and Loomis AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXT Energy position performs unexpectedly, Loomis AB 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 Loomis AB will offset losses from the drop in Loomis AB's long position.| NXT Energy vs. POSCO Holdings | NXT Energy vs. Schweizerische Nationalbank | NXT Energy vs. Berkshire Hathaway | NXT Energy vs. Berkshire Hathaway |
| Loomis AB vs. Allegion PLC | Loomis AB vs. MSA Safety | Loomis AB vs. Resideo Technologies | Loomis AB vs. NL Industries |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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