Correlation Between Nextmart and One World
Can any of the company-specific risk be diversified away by investing in both Nextmart and One World 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 Nextmart and One World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextmart and One World Universe, you can compare the effects of market volatilities on Nextmart and One World 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 Nextmart with a short position of One World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextmart and One World.
Diversification Opportunities for Nextmart and One World
Good diversification
The 3 months correlation between Nextmart and One is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nextmart and One World Universe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One World Universe and Nextmart 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 Nextmart are associated (or correlated) with One World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One World Universe has no effect on the direction of Nextmart i.e., Nextmart and One World go up and down completely randomly.
Pair Corralation between Nextmart and One World
Given the investment horizon of 90 days Nextmart is expected to generate 2.8 times more return on investment than One World. However, Nextmart is 2.8 times more volatile than One World Universe. It trades about 0.07 of its potential returns per unit of risk. One World Universe is currently generating about 0.04 per unit of risk. If you would invest 1.66 in Nextmart on August 25, 2024 and sell it today you would lose (1.62) from holding Nextmart or give up 97.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextmart vs. One World Universe
Performance |
| Timeline |
| Nextmart |
| One World Universe |
Nextmart and One World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextmart and One World
The main advantage of trading using opposite Nextmart and One World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextmart position performs unexpectedly, One World 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 One World will offset losses from the drop in One World's long position.| Nextmart vs. Marchex | Nextmart vs. Snipp Interactive | Nextmart vs. Mirriad Advertising plc | Nextmart vs. Emerald Expositions Events |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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