Correlation Between NextPlat Corp and PLAIDInc

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

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

Diversification Opportunities for NextPlat Corp and PLAIDInc

-0.38

Correlation Coefficient

NextPlat Corp  PLAIDInc

Very good diversification

The 3 months correlation between NextPlat and PLAIDInc is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NextPlat Corp and PLAIDInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAIDInc 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 PLAIDInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAIDInc has no effect on the direction of NextPlat Corp i.e., NextPlat Corp and PLAIDInc go up and down completely randomly.

Pair Corralation between NextPlat Corp and PLAIDInc

Assuming the 90 days horizon NextPlat Corp is expected to under-perform the PLAIDInc. In addition to that, NextPlat Corp is 6.53 times more volatile than PLAIDInc. It trades about 0.0 of its total potential returns per unit of risk. PLAIDInc is currently generating about 0.13 per unit of volatility. If you would invest  514.00  in PLAIDInc on October 3, 2024 and sell it today you would earn a total of  111.00  from holding PLAIDInc or generate 21.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.78%
Values	Daily Returns

NextPlat Corp  vs.  PLAIDInc

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. In spite of fairly stable essential indicators, NextPlat Corp is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PLAIDInc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAIDInc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward indicators, PLAIDInc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextPlat Corp and PLAIDInc

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

The idea behind NextPlat Corp and PLAIDInc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..