Correlation Between BBB Foods and Nextplat Corp
Can any of the company-specific risk be diversified away by investing in both BBB Foods and Nextplat Corp 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 BBB Foods and Nextplat Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Nextplat Corp, you can compare the effects of market volatilities on BBB Foods and Nextplat Corp 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 BBB Foods with a short position of Nextplat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Nextplat Corp.
Diversification Opportunities for BBB Foods and Nextplat Corp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BBB and Nextplat is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Nextplat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextplat Corp and BBB Foods 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 BBB Foods are associated (or correlated) with Nextplat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextplat Corp has no effect on the direction of BBB Foods i.e., BBB Foods and Nextplat Corp go up and down completely randomly.
Pair Corralation between BBB Foods and Nextplat Corp
Given the investment horizon of 90 days BBB Foods is expected to generate 0.44 times more return on investment than Nextplat Corp. However, BBB Foods is 2.28 times less risky than Nextplat Corp. It trades about -0.16 of its potential returns per unit of risk. Nextplat Corp is currently generating about -0.12 per unit of risk. If you would invest 3,200 in BBB Foods on August 31, 2024 and sell it today you would lose (378.00) from holding BBB Foods or give up 11.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. Nextplat Corp
Performance |
| Timeline |
| BBB Foods |
| Nextplat Corp |
BBB Foods and Nextplat Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Nextplat Corp
The main advantage of trading using opposite BBB Foods and Nextplat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Nextplat Corp 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 Nextplat Corp will offset losses from the drop in Nextplat Corp's long position.| BBB Foods vs. Citizens Bancorp Investment | BBB Foods vs. Stepstone Group | BBB Foods vs. Independence Realty Trust | BBB Foods vs. Western Sierra Mining |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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