Correlation Between Triton International and NextTrip
Can any of the company-specific risk be diversified away by investing in both Triton International and NextTrip 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 Triton International and NextTrip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triton International Limited and NextTrip, you can compare the effects of market volatilities on Triton International and NextTrip 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 Triton International with a short position of NextTrip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triton International and NextTrip.
Diversification Opportunities for Triton International and NextTrip
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Triton and NextTrip is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and NextTrip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextTrip and Triton International 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 Triton International Limited are associated (or correlated) with NextTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextTrip has no effect on the direction of Triton International i.e., Triton International and NextTrip go up and down completely randomly.
Pair Corralation between Triton International and NextTrip
Assuming the 90 days trading horizon Triton International is expected to generate 2.59 times less return on investment than NextTrip. But when comparing it to its historical volatility, Triton International Limited is 8.12 times less risky than NextTrip. It trades about 0.03 of its potential returns per unit of risk. NextTrip is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,391 in NextTrip on August 27, 2024 and sell it today you would lose (1,114) from holding NextTrip or give up 80.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triton International Limited vs. NextTrip
Performance |
| Timeline |
| Triton International |
| NextTrip |
Triton International and NextTrip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triton International and NextTrip
The main advantage of trading using opposite Triton International and NextTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International position performs unexpectedly, NextTrip 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 NextTrip will offset losses from the drop in NextTrip's long position.The idea behind Triton International Limited and NextTrip 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.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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