Correlation Between TMTG and NEXO

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

Diversification Opportunities for TMTG and NEXO

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between TMTG and NEXO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TMTG and NEXO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXO and TMTG 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 TMTG 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 TMTG i.e., TMTG and NEXO go up and down completely randomly.

Pair Corralation between TMTG and NEXO

Assuming the 90 days trading horizon TMTG is expected to under-perform the NEXO. In addition to that, TMTG is 1.42 times more volatile than NEXO. It trades about -0.03 of its total potential returns per unit of risk. NEXO is currently generating about 0.0 per unit of volatility. If you would invest  242.00  in NEXO on December 29, 2023 and sell it today you would lose (109.00) from holding NEXO or give up 45.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy74.66%
ValuesDaily Returns

TMTG  vs.  NEXO

 Performance 
       Timeline  
TMTG 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days TMTG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TMTG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
NEXO 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in NEXO are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, NEXO exhibited solid returns over the last few months and may actually be approaching a breakup point.

TMTG and NEXO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TMTG and NEXO

The main advantage of trading using opposite TMTG and NEXO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMTG 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 TMTG 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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