Correlation Between NextTrip and Bit Digital

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

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

Diversification Opportunities for NextTrip and Bit Digital

-0.64

Correlation Coefficient

NextTrip  Bit Digital

Excellent diversification

The 3 months correlation between NextTrip and Bit is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding NextTrip and Bit Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bit Digital and NextTrip 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 NextTrip are associated (or correlated) with Bit Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bit Digital has no effect on the direction of NextTrip i.e., NextTrip and Bit Digital go up and down completely randomly.

Pair Corralation between NextTrip and Bit Digital

Given the investment horizon of 90 days NextTrip is expected to generate 1.46 times more return on investment than Bit Digital. However, NextTrip is 1.46 times more volatile than Bit Digital. It trades about 0.15 of its potential returns per unit of risk. Bit Digital is currently generating about 0.04 per unit of risk. If you would invest  220.00  in NextTrip on August 30, 2024 and sell it today you would earn a total of  80.00  from holding NextTrip or generate 36.36% return on investment over 90 days.

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

NextTrip  vs.  Bit Digital

NextTrip

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NextTrip are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, NextTrip reported solid returns over the last few months and may actually be approaching a breakup point.

Bit Digital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bit Digital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Bit Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextTrip and Bit Digital

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

The idea behind NextTrip and Bit Digital 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.