Correlation Between Nextdecade Corp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Nextdecade Corp and Dow Jones 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 Nextdecade Corp and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextdecade Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Nextdecade Corp and Dow Jones 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 Nextdecade Corp with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextdecade Corp and Dow Jones.
Diversification Opportunities for Nextdecade Corp and Dow Jones
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nextdecade and Dow is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nextdecade Corp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Nextdecade 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 Nextdecade Corp are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Nextdecade Corp i.e., Nextdecade Corp and Dow Jones go up and down completely randomly.
Pair Corralation between Nextdecade Corp and Dow Jones
Given the investment horizon of 90 days Nextdecade Corp is expected to generate 4.86 times more return on investment than Dow Jones. However, Nextdecade Corp is 4.86 times more volatile than Dow Jones Industrial. It trades about 0.24 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of risk. If you would invest 584.00 in Nextdecade Corp on September 1, 2024 and sell it today you would earn a total of 140.00 from holding Nextdecade Corp or generate 23.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextdecade Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Nextdecade Corp and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Nextdecade Corp
Pair trading matchups for Nextdecade Corp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Nextdecade Corp and Dow Jones
The main advantage of trading using opposite Nextdecade Corp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextdecade Corp position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Nextdecade Corp vs. EQT Corporation | Nextdecade Corp vs. Coterra Energy | Nextdecade Corp vs. Antero Resources Corp | Nextdecade Corp vs. Evolution Petroleum |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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