Correlation Between Nextgen and Israel Canada

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

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

Diversification Opportunities for Nextgen and Israel Canada

-0.56

Correlation Coefficient

Nextgen  Israel Canada

Excellent diversification

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

Pair Corralation between Nextgen and Israel Canada

Assuming the 90 days trading horizon Nextgen is expected to under-perform the Israel Canada. In addition to that, Nextgen is 2.2 times more volatile than Israel Canada. It trades about -0.08 of its total potential returns per unit of risk. Israel Canada is currently generating about 0.06 per unit of volatility. If you would invest  91,230  in Israel Canada on September 27, 2024 and sell it today you would earn a total of  56,870  from holding Israel Canada or generate 62.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.73%
Values	Daily Returns

Nextgen  vs.  Israel Canada

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.

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.

Pair Trading with Nextgen and Israel Canada

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

The idea behind Nextgen and Israel Canada 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.