Correlation Between NXG NextGen and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both NXG NextGen and Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley China, you can compare the effects of market volatilities on NXG NextGen and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and Morgan Stanley.
Diversification Opportunities for NXG NextGen and Morgan Stanley
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NXG and Morgan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Morgan Stanley China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley China 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley China has no effect on the direction of NXG NextGen i.e., NXG NextGen and Morgan Stanley go up and down completely randomly.
Pair Corralation between NXG NextGen and Morgan Stanley
Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 0.75 times more return on investment than Morgan Stanley. However, NXG NextGen Infrastructure is 1.33 times less risky than Morgan Stanley. It trades about 0.16 of its potential returns per unit of risk. Morgan Stanley China is currently generating about 0.03 per unit of risk. If you would invest 3,839 in NXG NextGen Infrastructure on August 30, 2024 and sell it today you would earn a total of 1,301 from holding NXG NextGen Infrastructure or generate 33.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXG NextGen Infrastructure vs. Morgan Stanley China
Performance |
| Timeline |
| NXG NextGen Infrastr |
| Morgan Stanley China |
NXG NextGen and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXG NextGen and Morgan Stanley
The main advantage of trading using opposite NXG NextGen and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley'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 |
| Morgan Stanley vs. Central Europe Russia | Morgan Stanley vs. Morgan Stanley India | Morgan Stanley vs. Ashmore Group Plc | Morgan Stanley vs. Nuveen Missouri Quality |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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