Correlation Between Voyageurs and Nexity

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

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

Diversification Opportunities for Voyageurs and Nexity

0.19

Correlation Coefficient

Voyageurs  Nexity

Average diversification

The 3 months correlation between Voyageurs and Nexity is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Voyageurs du Monde and Nexity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexity and Voyageurs 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 Voyageurs du Monde are associated (or correlated) with Nexity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexity has no effect on the direction of Voyageurs i.e., Voyageurs and Nexity go up and down completely randomly.

Pair Corralation between Voyageurs and Nexity

Assuming the 90 days trading horizon Voyageurs du Monde is expected to generate 0.51 times more return on investment than Nexity. However, Voyageurs du Monde is 1.98 times less risky than Nexity. It trades about 0.08 of its potential returns per unit of risk. Nexity is currently generating about -0.07 per unit of risk. If you would invest  13,150  in Voyageurs du Monde on February 18, 2024 and sell it today you would earn a total of  1,230  from holding Voyageurs du Monde or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Voyageurs du Monde  vs.  Nexity

Voyageurs du Monde

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Voyageurs du Monde are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Voyageurs may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Nexity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexity 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 forward indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Voyageurs and Nexity

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

The idea behind Voyageurs du Monde and Nexity 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.