Correlation Between New Germany and NXG NextGen
Can any of the company-specific risk be diversified away by investing in both New Germany and NXG NextGen 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 New Germany and NXG NextGen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Germany Closed and NXG NextGen Infrastructure, you can compare the effects of market volatilities on New Germany and NXG NextGen 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 New Germany with a short position of NXG NextGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Germany and NXG NextGen.
Diversification Opportunities for New Germany and NXG NextGen
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and NXG is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding New Germany Closed and NXG NextGen Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXG NextGen Infrastr and New Germany 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 New Germany Closed are associated (or correlated) with NXG NextGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXG NextGen Infrastr has no effect on the direction of New Germany i.e., New Germany and NXG NextGen go up and down completely randomly.
Pair Corralation between New Germany and NXG NextGen
Allowing for the 90-day total investment horizon New Germany Closed is expected to under-perform the NXG NextGen. But the fund apears to be less risky and, when comparing its historical volatility, New Germany Closed is 1.64 times less risky than NXG NextGen. The fund trades about -0.02 of its potential returns per unit of risk. The NXG NextGen Infrastructure is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,770 in NXG NextGen Infrastructure on August 27, 2024 and sell it today you would earn a total of 2,177 from holding NXG NextGen Infrastructure or generate 78.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Germany Closed vs. NXG NextGen Infrastructure
Performance |
| Timeline |
| New Germany Closed |
| NXG NextGen Infrastr |
New Germany and NXG NextGen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Germany and NXG NextGen
The main advantage of trading using opposite New Germany and NXG NextGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Germany position performs unexpectedly, NXG NextGen 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 NXG NextGen will offset losses from the drop in NXG NextGen's long position.| New Germany vs. Eagle Point Income | New Germany vs. Western Asset High | New Germany vs. Nuveen New York | New Germany vs. Western Asset High |
| NXG NextGen vs. PowerUp Acquisition Corp | NXG NextGen vs. Aurora Innovation | NXG NextGen vs. HUMANA INC | NXG NextGen vs. Aquagold International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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