Correlation Between NXS and Big Time

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

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

Diversification Opportunities for NXS and Big Time

0.09

Correlation Coefficient

NXS  Big Time

Significant diversification

The 3 months correlation between NXS and Big is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding NXS and Big Time in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Time and NXS 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 NXS are associated (or correlated) with Big Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Time has no effect on the direction of NXS i.e., NXS and Big Time go up and down completely randomly.

Pair Corralation between NXS and Big Time

Assuming the 90 days trading horizon NXS is expected to generate 0.38 times more return on investment than Big Time. However, NXS is 2.63 times less risky than Big Time. It trades about -0.01 of its potential returns per unit of risk. Big Time is currently generating about -0.14 per unit of risk. If you would invest  23.00  in NXS on November 27, 2024 and sell it today you would lose (1.00) from holding NXS or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

NXS  vs.  Big Time

NXS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NXS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, NXS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Big Time

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NXS and Big Time

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

The idea behind NXS and Big Time 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.