Correlation Between NEXT Plc and Reitmans (Canada)
Can any of the company-specific risk be diversified away by investing in both NEXT Plc and Reitmans (Canada) 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 NEXT Plc and Reitmans (Canada) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXT plc and Reitmans Limited, you can compare the effects of market volatilities on NEXT Plc and Reitmans (Canada) 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 NEXT Plc with a short position of Reitmans (Canada). Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXT Plc and Reitmans (Canada).
Diversification Opportunities for NEXT Plc and Reitmans (Canada)
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between NEXT and Reitmans is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NEXT plc and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans (Canada) and NEXT Plc 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 NEXT plc are associated (or correlated) with Reitmans (Canada). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans (Canada) has no effect on the direction of NEXT Plc i.e., NEXT Plc and Reitmans (Canada) go up and down completely randomly.
Pair Corralation between NEXT Plc and Reitmans (Canada)
Assuming the 90 days horizon NEXT plc is expected to generate 1.19 times more return on investment than Reitmans (Canada). However, NEXT Plc is 1.19 times more volatile than Reitmans Limited. It trades about 0.03 of its potential returns per unit of risk. Reitmans Limited is currently generating about -0.02 per unit of risk. If you would invest 10,650 in NEXT plc on November 3, 2024 and sell it today you would earn a total of 1,500 from holding NEXT plc or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
NEXT plc vs. Reitmans Limited
Performance |
| Timeline |
| NEXT plc |
| Reitmans (Canada) |
NEXT Plc and Reitmans (Canada) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXT Plc and Reitmans (Canada)
The main advantage of trading using opposite NEXT Plc and Reitmans (Canada) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXT Plc position performs unexpectedly, Reitmans (Canada) 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 Reitmans (Canada) will offset losses from the drop in Reitmans (Canada)'s long position.| NEXT Plc vs. Reitmans Limited | NEXT Plc vs. Reitmans Limited | NEXT Plc vs. Lulus Fashion Lounge | NEXT Plc vs. Duluth Holdings |
| Reitmans (Canada) vs. NEXT plc | Reitmans (Canada) vs. Reitmans Limited | Reitmans (Canada) vs. Lulus Fashion Lounge | Reitmans (Canada) vs. Duluth Holdings |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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