Correlation Between NXG NextGen and Ares Dynamic
Can any of the company-specific risk be diversified away by investing in both NXG NextGen and Ares Dynamic 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 Ares Dynamic 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 Ares Dynamic Credit, you can compare the effects of market volatilities on NXG NextGen and Ares Dynamic 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 Ares Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and Ares Dynamic.
Diversification Opportunities for NXG NextGen and Ares Dynamic
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NXG and Ares is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Ares Dynamic Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Dynamic Credit 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 Ares Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Dynamic Credit has no effect on the direction of NXG NextGen i.e., NXG NextGen and Ares Dynamic go up and down completely randomly.
Pair Corralation between NXG NextGen and Ares Dynamic
Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 2.26 times more return on investment than Ares Dynamic. However, NXG NextGen is 2.26 times more volatile than Ares Dynamic Credit. It trades about 0.1 of its potential returns per unit of risk. Ares Dynamic Credit is currently generating about 0.15 per unit of risk. If you would invest 2,907 in NXG NextGen Infrastructure on August 27, 2024 and sell it today you would earn a total of 2,040 from holding NXG NextGen Infrastructure or generate 70.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXG NextGen Infrastructure vs. Ares Dynamic Credit
Performance |
| Timeline |
| NXG NextGen Infrastr |
| Ares Dynamic Credit |
NXG NextGen and Ares Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXG NextGen and Ares Dynamic
The main advantage of trading using opposite NXG NextGen and Ares Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, Ares Dynamic 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 Ares Dynamic will offset losses from the drop in Ares Dynamic's long position.| NXG NextGen vs. PowerUp Acquisition Corp | NXG NextGen vs. Aurora Innovation | NXG NextGen vs. HUMANA INC | NXG NextGen vs. Aquagold International |
| Ares Dynamic vs. Eaton Vance Floating | Ares Dynamic vs. NXG NextGen Infrastructure | Ares Dynamic vs. GAMCO Natural Resources | Ares Dynamic vs. MFS Investment Grade |
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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