Correlation Between Innovative Eyewear and Nexgel

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

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

Diversification Opportunities for Innovative Eyewear and Nexgel

0.61

Correlation Coefficient

Innovative Eyewear  Nexgel

Poor diversification

The 3 months correlation between Innovative and Nexgel is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Eyewear and Nexgel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexgel Inc and Innovative Eyewear 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 Innovative Eyewear are associated (or correlated) with Nexgel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexgel Inc has no effect on the direction of Innovative Eyewear i.e., Innovative Eyewear and Nexgel go up and down completely randomly.

Pair Corralation between Innovative Eyewear and Nexgel

Given the investment horizon of 90 days Innovative Eyewear is expected to under-perform the Nexgel. In addition to that, Innovative Eyewear is 1.13 times more volatile than Nexgel Inc. It trades about -0.15 of its total potential returns per unit of risk. Nexgel Inc is currently generating about -0.14 per unit of volatility. If you would invest  456.00  in Nexgel Inc on December 30, 2024 and sell it today you would lose (168.00) from holding Nexgel Inc or give up 36.84% of portfolio value over 90 days.

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

Innovative Eyewear  vs.  Nexgel Inc

Innovative Eyewear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovative Eyewear has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nexgel Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexgel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Innovative Eyewear and Nexgel

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

The idea behind Innovative Eyewear and Nexgel 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.