Correlation Between Nextracker and NN

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

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

Diversification Opportunities for Nextracker and NN

-0.42

Correlation Coefficient

Nextracker  NN

Very good diversification

The 3 months correlation between Nextracker and NN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nextracker Class A and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Nextracker 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 Nextracker Class A are associated (or correlated) with NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Nextracker i.e., Nextracker and NN go up and down completely randomly.

Pair Corralation between Nextracker and NN

Considering the 90-day investment horizon Nextracker Class A is expected to generate 1.16 times more return on investment than NN. However, Nextracker is 1.16 times more volatile than NN Inc. It trades about 0.05 of its potential returns per unit of risk. NN Inc is currently generating about -0.06 per unit of risk. If you would invest  3,597  in Nextracker Class A on October 5, 2024 and sell it today you would earn a total of  350.00  from holding Nextracker Class A or generate 9.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Nextracker Class A  vs.  NN Inc

Nextracker Class A

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nextracker Class A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Nextracker unveiled solid returns over the last few months and may actually be approaching a breakup point.

NN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Nextracker and NN

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

The idea behind Nextracker Class A and NN Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.