Correlation Between NXG NextGen and MFS High
Can any of the company-specific risk be diversified away by investing in both NXG NextGen and MFS High 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 MFS High 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 MFS High Yield, you can compare the effects of market volatilities on NXG NextGen and MFS High 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 MFS High. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and MFS High.
Diversification Opportunities for NXG NextGen and MFS High
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between NXG and MFS is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and MFS High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Yield 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 MFS High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Yield has no effect on the direction of NXG NextGen i.e., NXG NextGen and MFS High go up and down completely randomly.
Pair Corralation between NXG NextGen and MFS High
Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 2.84 times more return on investment than MFS High. However, NXG NextGen is 2.84 times more volatile than MFS High Yield. It trades about 0.18 of its potential returns per unit of risk. MFS High Yield is currently generating about 0.12 per unit of risk. If you would invest 2,940 in NXG NextGen Infrastructure on August 28, 2024 and sell it today you would earn a total of 2,057 from holding NXG NextGen Infrastructure or generate 69.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXG NextGen Infrastructure vs. MFS High Yield
Performance |
| Timeline |
| NXG NextGen Infrastr |
| MFS High Yield |
NXG NextGen and MFS High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXG NextGen and MFS High
The main advantage of trading using opposite NXG NextGen and MFS High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, MFS High 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 MFS High will offset losses from the drop in MFS High's long position.| NXG NextGen vs. PowerUp Acquisition Corp | NXG NextGen vs. Aurora Innovation | NXG NextGen vs. HUMANA INC | NXG NextGen vs. Aquagold International |
| MFS High vs. PowerUp Acquisition Corp | MFS High vs. Aurora Innovation | MFS High vs. HUMANA INC | MFS High vs. Aquagold International |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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