Correlation Between NextTrip and Thinkific Labs

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

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

Diversification Opportunities for NextTrip and Thinkific Labs

0.19

Correlation Coefficient

NextTrip  Thinkific Labs

Average diversification

The 3 months correlation between NextTrip and Thinkific is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NextTrip and Thinkific Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinkific Labs and NextTrip 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 NextTrip are associated (or correlated) with Thinkific Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinkific Labs has no effect on the direction of NextTrip i.e., NextTrip and Thinkific Labs go up and down completely randomly.

Pair Corralation between NextTrip and Thinkific Labs

Given the investment horizon of 90 days NextTrip is expected to under-perform the Thinkific Labs. In addition to that, NextTrip is 2.09 times more volatile than Thinkific Labs. It trades about -0.3 of its total potential returns per unit of risk. Thinkific Labs is currently generating about 0.04 per unit of volatility. If you would invest  295.00  in Thinkific Labs on January 29, 2024 and sell it today you would earn a total of  5.00  from holding Thinkific Labs or generate 1.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NextTrip  vs.  Thinkific Labs

NextTrip

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextTrip has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Thinkific Labs

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thinkific Labs are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Thinkific Labs reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextTrip and Thinkific Labs

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

The idea behind NextTrip and Thinkific Labs 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 Transaction History module to view history of all your transactions and understand their impact on performance.