Correlation Between Nextplat Corp and Reservoir Media

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

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

Diversification Opportunities for Nextplat Corp and Reservoir Media

-0.76

Correlation Coefficient

Nextplat Corp  Reservoir Media

Pay attention - limited upside

The 3 months correlation between Nextplat and Reservoir is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nextplat Corp and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media and Nextplat Corp 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 Nextplat Corp are associated (or correlated) with Reservoir Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reservoir Media has no effect on the direction of Nextplat Corp i.e., Nextplat Corp and Reservoir Media go up and down completely randomly.

Pair Corralation between Nextplat Corp and Reservoir Media

Given the investment horizon of 90 days Nextplat Corp is expected to under-perform the Reservoir Media. In addition to that, Nextplat Corp is 2.2 times more volatile than Reservoir Media. It trades about -0.09 of its total potential returns per unit of risk. Reservoir Media is currently generating about 0.17 per unit of volatility. If you would invest  736.00  in Reservoir Media on August 31, 2024 and sell it today you would earn a total of  191.00  from holding Reservoir Media or generate 25.95% return on investment over 90 days.

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

Nextplat Corp  vs.  Reservoir Media

Nextplat Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextplat Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Reservoir Media

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Reservoir Media are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Reservoir Media reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nextplat Corp and Reservoir Media

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

The idea behind Nextplat Corp and Reservoir Media 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.