Correlation Between Nextgen and Brill Shoe
Can any of the company-specific risk be diversified away by investing in both Nextgen and Brill Shoe 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 Nextgen and Brill Shoe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextgen and Brill Shoe Industries, you can compare the effects of market volatilities on Nextgen and Brill Shoe 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 Nextgen with a short position of Brill Shoe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextgen and Brill Shoe.
Diversification Opportunities for Nextgen and Brill Shoe
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nextgen and Brill is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nextgen and Brill Shoe Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brill Shoe Industries and Nextgen 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 Nextgen are associated (or correlated) with Brill Shoe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brill Shoe Industries has no effect on the direction of Nextgen i.e., Nextgen and Brill Shoe go up and down completely randomly.
Pair Corralation between Nextgen and Brill Shoe
Assuming the 90 days trading horizon Nextgen is expected to under-perform the Brill Shoe. In addition to that, Nextgen is 1.49 times more volatile than Brill Shoe Industries. It trades about -0.12 of its total potential returns per unit of risk. Brill Shoe Industries is currently generating about 0.04 per unit of volatility. If you would invest 245,000 in Brill Shoe Industries on November 28, 2024 and sell it today you would earn a total of 4,000 from holding Brill Shoe Industries or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextgen vs. Brill Shoe Industries
Performance |
| Timeline |
| Nextgen |
| Brill Shoe Industries |
Nextgen and Brill Shoe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextgen and Brill Shoe
The main advantage of trading using opposite Nextgen and Brill Shoe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextgen position performs unexpectedly, Brill Shoe 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 Brill Shoe will offset losses from the drop in Brill Shoe's long position.| Nextgen vs. Clal Biotechnology Industries | Nextgen vs. Spuntech | Nextgen vs. Orbit Technologies | Nextgen vs. Rimon Consulting Management |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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