Correlation Between Benchmark Botanics and Nextleaf Solutions

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

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

Diversification Opportunities for Benchmark Botanics and Nextleaf Solutions

0.0

Correlation Coefficient

Benchmark Botanics  Nextleaf Solutions

Pay attention - limited upside

The 3 months correlation between Benchmark and Nextleaf is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Botanics and Nextleaf Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextleaf Solutions and Benchmark Botanics 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 Benchmark Botanics are associated (or correlated) with Nextleaf Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextleaf Solutions has no effect on the direction of Benchmark Botanics i.e., Benchmark Botanics and Nextleaf Solutions go up and down completely randomly.

Pair Corralation between Benchmark Botanics and Nextleaf Solutions

If you would invest  5.11  in Nextleaf Solutions on October 23, 2024 and sell it today you would lose (0.21) from holding Nextleaf Solutions or give up 4.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Benchmark Botanics  vs.  Nextleaf Solutions

Benchmark Botanics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Benchmark Botanics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Benchmark Botanics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nextleaf Solutions

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nextleaf Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Nextleaf Solutions may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Benchmark Botanics and Nextleaf Solutions

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

The idea behind Benchmark Botanics and Nextleaf Solutions 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.