Correlation Between Nextera Energy and BioLight Life
Can any of the company-specific risk be diversified away by investing in both Nextera Energy and BioLight Life 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 Nextera Energy and BioLight Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextera Energy and BioLight Life Sciences, you can compare the effects of market volatilities on Nextera Energy and BioLight Life 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 Nextera Energy with a short position of BioLight Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and BioLight Life.
Diversification Opportunities for Nextera Energy and BioLight Life
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nextera and BioLight is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy and BioLight Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLight Life Sciences and Nextera Energy 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 Nextera Energy are associated (or correlated) with BioLight Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLight Life Sciences has no effect on the direction of Nextera Energy i.e., Nextera Energy and BioLight Life go up and down completely randomly.
Pair Corralation between Nextera Energy and BioLight Life
Considering the 90-day investment horizon Nextera Energy is expected to generate 0.64 times more return on investment than BioLight Life. However, Nextera Energy is 1.56 times less risky than BioLight Life. It trades about 0.18 of its potential returns per unit of risk. BioLight Life Sciences is currently generating about -0.68 per unit of risk. If you would invest 6,261 in Nextera Energy on January 24, 2024 and sell it today you would earn a total of 359.00 from holding Nextera Energy or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Nextera Energy vs. BioLight Life Sciences
Performance |
| Timeline |
| Nextera Energy |
| BioLight Life Sciences |
Nextera Energy and BioLight Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextera Energy and BioLight Life
The main advantage of trading using opposite Nextera Energy and BioLight Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy position performs unexpectedly, BioLight Life 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 BioLight Life will offset losses from the drop in BioLight Life's long position.| Nextera Energy vs. Centrais Eltricas Brasileiras | Nextera Energy vs. Central Puerto SA | Nextera Energy vs. CMS Energy | Nextera Energy vs. Centrais Electricas Brasileiras |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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