Correlation Between Israel Canada and Nextgen

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

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

Diversification Opportunities for Israel Canada and Nextgen

-0.56

Correlation Coefficient

Israel Canada  Nextgen

Excellent diversification

The 3 months correlation between Israel and Nextgen is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Israel Canada and Nextgen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextgen and Israel Canada 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 Israel Canada are associated (or correlated) with Nextgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextgen has no effect on the direction of Israel Canada i.e., Israel Canada and Nextgen go up and down completely randomly.

Pair Corralation between Israel Canada and Nextgen

Assuming the 90 days trading horizon Israel Canada is expected to generate 0.33 times more return on investment than Nextgen. However, Israel Canada is 3.03 times less risky than Nextgen. It trades about 0.1 of its potential returns per unit of risk. Nextgen is currently generating about -0.06 per unit of risk. If you would invest  137,300  in Israel Canada on September 27, 2024 and sell it today you would earn a total of  10,800  from holding Israel Canada or generate 7.87% return on investment over 90 days.

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

Israel Canada  vs.  Nextgen

Israel Canada

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Canada are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Israel Canada may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nextgen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextgen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Israel Canada and Nextgen

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

The idea behind Israel Canada and Nextgen 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.