Correlation Between Nextplat Corp and Globalfoundries
Can any of the company-specific risk be diversified away by investing in both Nextplat Corp and Globalfoundries 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 Nextplat Corp and Globalfoundries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextplat Corp and Globalfoundries, you can compare the effects of market volatilities on Nextplat Corp and Globalfoundries 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 Nextplat Corp with a short position of Globalfoundries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextplat Corp and Globalfoundries.
Diversification Opportunities for Nextplat Corp and Globalfoundries
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nextplat and Globalfoundries is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nextplat Corp and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries and Nextplat Corp 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 Nextplat Corp are associated (or correlated) with Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Nextplat Corp i.e., Nextplat Corp and Globalfoundries go up and down completely randomly.
Pair Corralation between Nextplat Corp and Globalfoundries
Given the investment horizon of 90 days Nextplat Corp is expected to under-perform the Globalfoundries. In addition to that, Nextplat Corp is 1.47 times more volatile than Globalfoundries. It trades about -0.08 of its total potential returns per unit of risk. Globalfoundries is currently generating about 0.08 per unit of volatility. If you would invest 4,024 in Globalfoundries on August 27, 2024 and sell it today you would earn a total of 256.00 from holding Globalfoundries or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextplat Corp vs. Globalfoundries
Performance |
| Timeline |
| Nextplat Corp |
| Globalfoundries |
Nextplat Corp and Globalfoundries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextplat Corp and Globalfoundries
The main advantage of trading using opposite Nextplat Corp and Globalfoundries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextplat Corp position performs unexpectedly, Globalfoundries 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 Globalfoundries will offset losses from the drop in Globalfoundries' long position.The idea behind Nextplat Corp and Globalfoundries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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