Correlation Between Embecta Corp and Nexgel

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

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

Diversification Opportunities for Embecta Corp and Nexgel

0.8

Correlation Coefficient

Embecta Corp  Nexgel

Very poor diversification

The 3 months correlation between Embecta and Nexgel is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Embecta Corp and Nexgel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexgel Inc and Embecta Corp 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 Embecta Corp are associated (or correlated) with Nexgel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexgel Inc has no effect on the direction of Embecta Corp i.e., Embecta Corp and Nexgel go up and down completely randomly.

Pair Corralation between Embecta Corp and Nexgel

Given the investment horizon of 90 days Embecta Corp is expected to under-perform the Nexgel. But the stock apears to be less risky and, when comparing its historical volatility, Embecta Corp is 1.25 times less risky than Nexgel. The stock trades about -0.14 of its potential returns per unit of risk. The Nexgel Inc is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  365.00  in Nexgel Inc on February 3, 2025 and sell it today you would lose (99.00) from holding Nexgel Inc or give up 27.12% of portfolio value over 90 days.

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

Embecta Corp  vs.  Nexgel Inc

Embecta Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Embecta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nexgel Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexgel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in June 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Embecta Corp and Nexgel

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

The idea behind Embecta Corp and Nexgel Inc 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.