Correlation Between NextSource Materials and Infrastructure Dividend

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Can any of the company-specific risk be diversified away by investing in both NextSource Materials and Infrastructure Dividend 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 NextSource Materials and Infrastructure Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextSource Materials and Infrastructure Dividend Split, you can compare the effects of market volatilities on NextSource Materials and Infrastructure Dividend 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 NextSource Materials with a short position of Infrastructure Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and Infrastructure Dividend.

Diversification Opportunities for NextSource Materials and Infrastructure Dividend

NextSourceInfrastructureDiversified AwayNextSourceInfrastructureDiversified Away100%
-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between NextSource and Infrastructure is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Infrastructure Dividend Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infrastructure Dividend and NextSource Materials 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 NextSource Materials are associated (or correlated) with Infrastructure Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infrastructure Dividend has no effect on the direction of NextSource Materials i.e., NextSource Materials and Infrastructure Dividend go up and down completely randomly.

Pair Corralation between NextSource Materials and Infrastructure Dividend

Assuming the 90 days trading horizon NextSource Materials is expected to generate 8.98 times more return on investment than Infrastructure Dividend. However, NextSource Materials is 8.98 times more volatile than Infrastructure Dividend Split. It trades about 0.2 of its potential returns per unit of risk. Infrastructure Dividend Split is currently generating about -0.04 per unit of risk. If you would invest  58.00  in NextSource Materials on October 31, 2024 and sell it today you would earn a total of  26.00  from holding NextSource Materials or generate 44.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.5%
ValuesDaily Returns

NextSource Materials  vs.  Infrastructure Dividend Split

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -20-10010203040
JavaScript chart by amCharts 3.21.15NEXT IS
       Timeline  
NextSource Materials 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NextSource Materials are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, NextSource Materials displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.50.550.60.650.70.750.80.850.9
Infrastructure Dividend 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Infrastructure Dividend Split has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Infrastructure Dividend is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan14.514.614.714.814.91515.1

NextSource Materials and Infrastructure Dividend Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-14.87-11.14-7.41-3.67-0.013.817.7511.715.6419.58 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15NEXT IS
       Returns  

Pair Trading with NextSource Materials and Infrastructure Dividend

The main advantage of trading using opposite NextSource Materials and Infrastructure Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextSource Materials position performs unexpectedly, Infrastructure Dividend 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 Infrastructure Dividend will offset losses from the drop in Infrastructure Dividend's long position.
The idea behind NextSource Materials and Infrastructure Dividend Split 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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