Correlation Between NXG NextGen and BlackRock Capital
Can any of the company-specific risk be diversified away by investing in both NXG NextGen and BlackRock Capital 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 BlackRock Capital 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 BlackRock Capital Allocation, you can compare the effects of market volatilities on NXG NextGen and BlackRock Capital 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 BlackRock Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and BlackRock Capital.
Diversification Opportunities for NXG NextGen and BlackRock Capital
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NXG and BlackRock is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and BlackRock Capital Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Capital 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 BlackRock Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Capital has no effect on the direction of NXG NextGen i.e., NXG NextGen and BlackRock Capital go up and down completely randomly.
Pair Corralation between NXG NextGen and BlackRock Capital
Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 2.52 times more return on investment than BlackRock Capital. However, NXG NextGen is 2.52 times more volatile than BlackRock Capital Allocation. It trades about 0.05 of its potential returns per unit of risk. BlackRock Capital Allocation is currently generating about 0.09 per unit of risk. If you would invest 3,192 in NXG NextGen Infrastructure on August 24, 2024 and sell it today you would earn a total of 1,591 from holding NXG NextGen Infrastructure or generate 49.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NXG NextGen Infrastructure vs. BlackRock Capital Allocation
Performance |
| Timeline |
| NXG NextGen Infrastr |
| BlackRock Capital |
NXG NextGen and BlackRock Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXG NextGen and BlackRock Capital
The main advantage of trading using opposite NXG NextGen and BlackRock Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, BlackRock Capital 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 BlackRock Capital will offset losses from the drop in BlackRock Capital'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 |
| BlackRock Capital vs. Invesco High Income | BlackRock Capital vs. Blackrock Muniholdings Ny | BlackRock Capital vs. MFS Investment Grade | BlackRock Capital vs. Federated Premier Municipal |
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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