Correlation Between Environmental Waste and NextSource Materials

Can any of the company-specific risk be diversified away by investing in both Environmental Waste and NextSource Materials 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 Environmental Waste and NextSource Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Environmental Waste International and NextSource Materials, you can compare the effects of market volatilities on Environmental Waste and NextSource Materials 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 Environmental Waste with a short position of NextSource Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Environmental Waste and NextSource Materials.

Diversification Opportunities for Environmental Waste and NextSource Materials

0.25

Correlation Coefficient

Environmental Waste  NextSource Materials

Modest diversification

The 3 months correlation between Environmental and NextSource is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Environmental Waste Internatio and NextSource Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextSource Materials and Environmental Waste 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 Environmental Waste International are associated (or correlated) with NextSource Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextSource Materials has no effect on the direction of Environmental Waste i.e., Environmental Waste and NextSource Materials go up and down completely randomly.

Pair Corralation between Environmental Waste and NextSource Materials

If you would invest  1.00  in Environmental Waste International on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Environmental Waste International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Environmental Waste Internatio  vs.  NextSource Materials

Environmental Waste

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Environmental Waste International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Environmental Waste is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

NextSource Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextSource Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Environmental Waste and NextSource Materials

The main advantage of trading using opposite Environmental Waste and NextSource Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Environmental Waste position performs unexpectedly, NextSource Materials 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 NextSource Materials will offset losses from the drop in NextSource Materials' long position.

The idea behind Environmental Waste International and NextSource Materials 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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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.