Correlation Between GX AI and NEXG11
Can any of the company-specific risk be diversified away by investing in both GX AI and NEXG11 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 GX AI and NEXG11 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GX AI TECH and NEXG11, you can compare the effects of market volatilities on GX AI and NEXG11 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 GX AI with a short position of NEXG11. Check out your portfolio center. Please also check ongoing floating volatility patterns of GX AI and NEXG11.
Diversification Opportunities for GX AI and NEXG11
Almost no diversification
The 3 months correlation between BAIQ39 and NEXG11 is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding GX AI TECH and NEXG11 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXG11 and GX AI 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 GX AI TECH are associated (or correlated) with NEXG11. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXG11 has no effect on the direction of GX AI i.e., GX AI and NEXG11 go up and down completely randomly.
Pair Corralation between GX AI and NEXG11
Assuming the 90 days trading horizon GX AI TECH is expected to generate 3.88 times more return on investment than NEXG11. However, GX AI is 3.88 times more volatile than NEXG11. It trades about 0.14 of its potential returns per unit of risk. NEXG11 is currently generating about 0.33 per unit of risk. If you would invest 4,745 in GX AI TECH on September 20, 2024 and sell it today you would earn a total of 3,423 from holding GX AI TECH or generate 72.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 94.24% |
Values | Daily Returns |
GX AI TECH vs. NEXG11
Performance |
Timeline |
GX AI TECH |
NEXG11 |
GX AI and NEXG11 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GX AI and NEXG11
The main advantage of trading using opposite GX AI and NEXG11 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GX AI position performs unexpectedly, NEXG11 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 NEXG11 will offset losses from the drop in NEXG11's long position.GX AI vs. NXP Semiconductors NV | GX AI vs. Palantir Technologies | GX AI vs. United Rentals | GX AI vs. Spotify Technology SA |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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