Correlation Between NXT Energy and NCS Multistage
Can any of the company-specific risk be diversified away by investing in both NXT Energy and NCS Multistage 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 NCS Multistage 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 NCS Multistage Holdings, you can compare the effects of market volatilities on NXT Energy and NCS Multistage 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 NCS Multistage. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXT Energy and NCS Multistage.
Diversification Opportunities for NXT Energy and NCS Multistage
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NXT and NCS is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NXT Energy Solutions and NCS Multistage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCS Multistage Holdings 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 NCS Multistage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCS Multistage Holdings has no effect on the direction of NXT Energy i.e., NXT Energy and NCS Multistage go up and down completely randomly.
Pair Corralation between NXT Energy and NCS Multistage
Assuming the 90 days horizon NXT Energy Solutions is expected to generate 3.38 times more return on investment than NCS Multistage. However, NXT Energy is 3.38 times more volatile than NCS Multistage Holdings. It trades about 0.14 of its potential returns per unit of risk. NCS Multistage Holdings is currently generating about 0.31 per unit of risk. 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 |
NXT Energy Solutions vs. NCS Multistage Holdings
Performance |
| Timeline |
| NXT Energy Solutions |
| NCS Multistage Holdings |
NXT Energy and NCS Multistage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXT Energy and NCS Multistage
The main advantage of trading using opposite NXT Energy and NCS Multistage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXT Energy position performs unexpectedly, NCS Multistage 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 NCS Multistage will offset losses from the drop in NCS Multistage's long position.| NXT Energy vs. Petroleo Brasileiro Petrobras | NXT Energy vs. Equinor ASA ADR | NXT Energy vs. Eni SpA ADR | NXT Energy vs. YPF Sociedad Anonima |
| NCS Multistage vs. Bri Chem Corp | NCS Multistage vs. NXT Energy Solutions | NCS Multistage vs. Bristow Group | NCS Multistage vs. Natural Gas Services |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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