Correlation Between Nextracker and VivoPower International

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

By analyzing existing cross correlation between Nextracker Class A and VivoPower International PLC, you can compare the effects of market volatilities on Nextracker and VivoPower International 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 Nextracker with a short position of VivoPower International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextracker and VivoPower International.

Diversification Opportunities for Nextracker and VivoPower International

0.09

Correlation Coefficient

Nextracker  VivoPower International

Significant diversification

The 3 months correlation between Nextracker and VivoPower is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nextracker Class A and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International and Nextracker 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 Nextracker Class A are associated (or correlated) with VivoPower International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VivoPower International has no effect on the direction of Nextracker i.e., Nextracker and VivoPower International go up and down completely randomly.

Pair Corralation between Nextracker and VivoPower International

Considering the 90-day investment horizon Nextracker Class A is expected to generate 0.34 times more return on investment than VivoPower International. However, Nextracker Class A is 2.92 times less risky than VivoPower International. It trades about 0.03 of its potential returns per unit of risk. VivoPower International PLC is currently generating about 0.01 per unit of risk. If you would invest  3,723  in Nextracker Class A on September 3, 2024 and sell it today you would earn a total of  93.00  from holding Nextracker Class A or generate 2.5% return on investment over 90 days.

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

Nextracker Class A  vs.  VivoPower International PLC

Nextracker Class A

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nextracker Class A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Nextracker may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VivoPower International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VivoPower International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, VivoPower International is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nextracker and VivoPower International

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

The idea behind Nextracker Class A and VivoPower International PLC 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.