Correlation Between BRC and NEXO
Can any of the company-specific risk be diversified away by investing in both BRC and NEXO 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 BRC and NEXO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRC and NEXO, you can compare the effects of market volatilities on BRC and NEXO 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 BRC with a short position of NEXO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and NEXO.
Diversification Opportunities for BRC and NEXO
Very weak diversification
The 12 months correlation between BRC and NEXO is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BRC and NEXO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXO and BRC 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 BRC are associated (or correlated) with NEXO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXO has no effect on the direction of BRC i.e., BRC and NEXO go up and down completely randomly.
Pair Corralation between BRC and NEXO
If you would invest 75.00 in NEXO on February 6, 2024 and sell it today you would earn a total of 55.00 from holding NEXO or generate 73.33% return on investment over 90 days.
| Time Period | 12 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.78% |
| Values | Daily Returns |
BRC vs. NEXO
Performance |
| Timeline |
| BRC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| NEXO |
BRC and NEXO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRC and NEXO
The main advantage of trading using opposite BRC and NEXO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC position performs unexpectedly, NEXO 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 NEXO will offset losses from the drop in NEXO's long position.The idea behind BRC and NEXO 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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