Correlation Between NXG NextGen and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both NXG NextGen and Diamond Hill 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 Diamond Hill 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 Diamond Hill Investment, you can compare the effects of market volatilities on NXG NextGen and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and Diamond Hill.
Diversification Opportunities for NXG NextGen and Diamond Hill
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NXG and Diamond is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of NXG NextGen i.e., NXG NextGen and Diamond Hill go up and down completely randomly.
Pair Corralation between NXG NextGen and Diamond Hill
Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 1.37 times more return on investment than Diamond Hill. However, NXG NextGen is 1.37 times more volatile than Diamond Hill Investment. It trades about 0.06 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about 0.01 per unit of risk. If you would invest 3,076 in NXG NextGen Infrastructure on August 27, 2024 and sell it today you would earn a total of 1,871 from holding NXG NextGen Infrastructure or generate 60.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXG NextGen Infrastructure vs. Diamond Hill Investment
Performance |
| Timeline |
| NXG NextGen Infrastr |
| Diamond Hill Investment |
NXG NextGen and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXG NextGen and Diamond Hill
The main advantage of trading using opposite NXG NextGen and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| NXG NextGen vs. PowerUp Acquisition Corp | NXG NextGen vs. Aurora Innovation | NXG NextGen vs. HUMANA INC | NXG NextGen vs. Aquagold International |
| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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