Correlation Between NextTrip and Digimarc

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

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

Diversification Opportunities for NextTrip and Digimarc

0.79

Correlation Coefficient

NextTrip  Digimarc

Poor diversification

The 3 months correlation between NextTrip and Digimarc is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NextTrip and Digimarc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digimarc 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 Digimarc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digimarc has no effect on the direction of NextTrip i.e., NextTrip and Digimarc go up and down completely randomly.

Pair Corralation between NextTrip and Digimarc

Given the investment horizon of 90 days NextTrip is expected to generate 1.13 times more return on investment than Digimarc. However, NextTrip is 1.13 times more volatile than Digimarc. It trades about 0.01 of its potential returns per unit of risk. Digimarc is currently generating about -0.2 per unit of risk. If you would invest  632.00  in NextTrip on December 30, 2024 and sell it today you would lose (79.00) from holding NextTrip or give up 12.5% of portfolio value over 90 days.

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

NextTrip  vs.  Digimarc

NextTrip

Risk-Adjusted Performance

Very Weak

Over the last 90 days NextTrip has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NextTrip is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Digimarc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digimarc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NextTrip and Digimarc

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

The idea behind NextTrip and Digimarc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.