Correlation Between NextPlat Corp and Bowmo

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

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

Diversification Opportunities for NextPlat Corp and Bowmo

-0.08

Correlation Coefficient

NextPlat Corp  Bowmo

Good diversification

The 3 months correlation between NextPlat and Bowmo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NextPlat Corp and Bowmo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowmo Inc and NextPlat Corp 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 NextPlat Corp are associated (or correlated) with Bowmo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowmo Inc has no effect on the direction of NextPlat Corp i.e., NextPlat Corp and Bowmo go up and down completely randomly.

Pair Corralation between NextPlat Corp and Bowmo

Assuming the 90 days horizon NextPlat Corp is expected to generate 20.0 times less return on investment than Bowmo. But when comparing it to its historical volatility, NextPlat Corp is 2.22 times less risky than Bowmo. It trades about 0.01 of its potential returns per unit of risk. Bowmo Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.17  in Bowmo Inc on September 24, 2024 and sell it today you would lose (0.07) from holding Bowmo Inc or give up 41.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.0%
Values	Daily Returns

NextPlat Corp  vs.  Bowmo Inc

NextPlat Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextPlat Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Bowmo Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bowmo Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Bowmo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextPlat Corp and Bowmo

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

The idea behind NextPlat Corp and Bowmo Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.