Correlation Between NXT and Audius
Can any of the company-specific risk be diversified away by investing in both NXT and Audius 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 and Audius into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NXT and Audius, you can compare the effects of market volatilities on NXT and Audius 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 with a short position of Audius. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXT and Audius.
Diversification Opportunities for NXT and Audius
Very weak diversification
The 3 months correlation between NXT and Audius is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding NXT and Audius in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audius and NXT 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 are associated (or correlated) with Audius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audius has no effect on the direction of NXT i.e., NXT and Audius go up and down completely randomly.
Pair Corralation between NXT and Audius
Assuming the 90 days trading horizon NXT is expected to generate 0.97 times more return on investment than Audius. However, NXT is 1.03 times less risky than Audius. It trades about 0.4 of its potential returns per unit of risk. Audius is currently generating about 0.24 per unit of risk. If you would invest 0.07 in NXT on August 25, 2024 and sell it today you would earn a total of 0.03 from holding NXT or generate 44.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXT vs. Audius
Performance |
| Timeline |
| NXT |
| Audius |
NXT and Audius Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXT and Audius
The main advantage of trading using opposite NXT and Audius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXT position performs unexpectedly, Audius 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 Audius will offset losses from the drop in Audius' long position.The idea behind NXT and Audius 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.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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |