Correlation Between SL Green and Nextracker

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

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

Diversification Opportunities for SL Green and Nextracker

-0.33

Correlation Coefficient

SL Green  Nextracker

Very good diversification

The 3 months correlation between SLG and Nextracker is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A and SL Green 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 SL Green Realty are associated (or correlated) with Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of SL Green i.e., SL Green and Nextracker go up and down completely randomly.

Pair Corralation between SL Green and Nextracker

Considering the 90-day investment horizon SL Green Realty is expected to under-perform the Nextracker. But the stock apears to be less risky and, when comparing its historical volatility, SL Green Realty is 2.27 times less risky than Nextracker. The stock trades about -0.09 of its potential returns per unit of risk. The Nextracker Class A is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,146  in Nextracker Class A on October 25, 2024 and sell it today you would earn a total of  955.00  from holding Nextracker Class A or generate 30.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

SL Green Realty  vs.  Nextracker Class A

SL Green Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Nextracker Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nextracker Class A are ranked lower than 9 (%) 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.

Pair Trading with SL Green and Nextracker

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

The idea behind SL Green Realty and Nextracker Class A 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.