Correlation Between Broadleaf and NextPlat Corp

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

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

Diversification Opportunities for Broadleaf and NextPlat Corp

0.22

Correlation Coefficient

Broadleaf  NextPlat Corp

Modest diversification

The 3 months correlation between Broadleaf and NextPlat is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Broadleaf Co and NextPlat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextPlat Corp and Broadleaf 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 Broadleaf Co are associated (or correlated) with NextPlat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextPlat Corp has no effect on the direction of Broadleaf i.e., Broadleaf and NextPlat Corp go up and down completely randomly.

Pair Corralation between Broadleaf and NextPlat Corp

Assuming the 90 days horizon Broadleaf is expected to generate 1197.59 times less return on investment than NextPlat Corp. But when comparing it to its historical volatility, Broadleaf Co is 845.44 times less risky than NextPlat Corp. It trades about 0.13 of its potential returns per unit of risk. NextPlat Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  9.90  in NextPlat Corp on December 28, 2024 and sell it today you would earn a total of  14.10  from holding NextPlat Corp or generate 142.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.52%
Values	Daily Returns

Broadleaf Co  vs.  NextPlat Corp

Broadleaf

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadleaf Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Broadleaf is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NextPlat Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NextPlat Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, NextPlat Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadleaf and NextPlat Corp

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

The idea behind Broadleaf Co and NextPlat Corp 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.