Correlation Between NXG NextGen and Abrdn Emerging
Can any of the company-specific risk be diversified away by investing in both NXG NextGen and Abrdn Emerging 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 NXG NextGen and Abrdn Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NXG NextGen Infrastructure and Abrdn Emerging Markets, you can compare the effects of market volatilities on NXG NextGen and Abrdn Emerging 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 NXG NextGen with a short position of Abrdn Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and Abrdn Emerging.
Diversification Opportunities for NXG NextGen and Abrdn Emerging
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NXG and Abrdn is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Abrdn Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abrdn Emerging Markets and NXG NextGen 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 NXG NextGen Infrastructure are associated (or correlated) with Abrdn Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abrdn Emerging Markets has no effect on the direction of NXG NextGen i.e., NXG NextGen and Abrdn Emerging go up and down completely randomly.
Pair Corralation between NXG NextGen and Abrdn Emerging
Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 1.48 times more return on investment than Abrdn Emerging. However, NXG NextGen is 1.48 times more volatile than Abrdn Emerging Markets. It trades about 0.11 of its potential returns per unit of risk. Abrdn Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest 2,966 in NXG NextGen Infrastructure on August 31, 2024 and sell it today you would earn a total of 2,378 from holding NXG NextGen Infrastructure or generate 80.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXG NextGen Infrastructure vs. Abrdn Emerging Markets
Performance |
| Timeline |
| NXG NextGen Infrastr |
| Abrdn Emerging Markets |
NXG NextGen and Abrdn Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXG NextGen and Abrdn Emerging
The main advantage of trading using opposite NXG NextGen and Abrdn Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, Abrdn Emerging 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 Abrdn Emerging will offset losses from the drop in Abrdn Emerging's long position.| NXG NextGen vs. MFS Investment Grade | NXG NextGen vs. Invesco High Income | NXG NextGen vs. Eaton Vance National | NXG NextGen vs. Nuveen California Select |
| Abrdn Emerging vs. DWS Municipal Income | Abrdn Emerging vs. Blackrock Muni Intermediate | Abrdn Emerging vs. Blackrock Muniyield | Abrdn Emerging vs. Flow Capital Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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