Correlation Between Nextage Therapeutics and International Business

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Nextage Therapeutics and International Business 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 Nextage Therapeutics and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextage Therapeutics and International Business Machines, you can compare the effects of market volatilities on Nextage Therapeutics and International Business 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 Nextage Therapeutics with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextage Therapeutics and International Business.

Diversification Opportunities for Nextage Therapeutics and International Business

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nextage and International is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nextage Therapeutics and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Nextage Therapeutics 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 Nextage Therapeutics are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Nextage Therapeutics i.e., Nextage Therapeutics and International Business go up and down completely randomly.

Pair Corralation between Nextage Therapeutics and International Business

Assuming the 90 days trading horizon Nextage Therapeutics is expected to under-perform the International Business. In addition to that, Nextage Therapeutics is 2.13 times more volatile than International Business Machines. It trades about -0.16 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.11 per unit of volatility. If you would invest  18,487  in International Business Machines on December 29, 2023 and sell it today you would earn a total of  593.00  from holding International Business Machines or generate 3.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy72.73%
ValuesDaily Returns

Nextage Therapeutics  vs.  International Business Machine

 Performance 
       Timeline  
Nextage Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Nextage Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
International Business 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

Nextage Therapeutics and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nextage Therapeutics and International Business

The main advantage of trading using opposite Nextage Therapeutics and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextage Therapeutics position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
The idea behind Nextage Therapeutics and International Business Machines 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

Other Complementary Tools

Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Insider Screener
Find insiders across different sectors to evaluate their impact on performance