Correlation Between Profire Ene and NXT Energy
Can any of the company-specific risk be diversified away by investing in both Profire Ene and NXT Energy 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 Profire Ene and NXT Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profire Ene and NXT Energy Solutions, you can compare the effects of market volatilities on Profire Ene and NXT Energy 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 Profire Ene with a short position of NXT Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profire Ene and NXT Energy.
Diversification Opportunities for Profire Ene and NXT Energy
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Profire and NXT is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Profire Ene and NXT Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXT Energy Solutions and Profire Ene 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 Profire Ene are associated (or correlated) with NXT Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXT Energy Solutions has no effect on the direction of Profire Ene i.e., Profire Ene and NXT Energy go up and down completely randomly.
Pair Corralation between Profire Ene and NXT Energy
Given the investment horizon of 90 days Profire Ene is expected to generate 0.51 times more return on investment than NXT Energy. However, Profire Ene is 1.96 times less risky than NXT Energy. It trades about 0.17 of its potential returns per unit of risk. NXT Energy Solutions is currently generating about 0.03 per unit of risk. If you would invest 162.00 in Profire Ene on August 28, 2024 and sell it today you would earn a total of 89.00 from holding Profire Ene or generate 54.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profire Ene vs. NXT Energy Solutions
Performance |
| Timeline |
| Profire Ene |
| NXT Energy Solutions |
Profire Ene and NXT Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profire Ene and NXT Energy
The main advantage of trading using opposite Profire Ene and NXT Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profire Ene position performs unexpectedly, NXT Energy 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 NXT Energy will offset losses from the drop in NXT Energy's long position.| Profire Ene vs. Enservco Co | Profire Ene vs. Nine Energy Service | Profire Ene vs. Enerflex | Profire Ene vs. Geospace Technologies |
| NXT Energy vs. Dawson Geophysical | NXT Energy vs. Bri Chem Corp | NXT Energy vs. NCS Multistage Holdings | NXT Energy vs. Bristow Group |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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