Correlation Between NXG NextGen and Federated Investors
Can any of the company-specific risk be diversified away by investing in both NXG NextGen and Federated Investors 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 Federated Investors 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 Federated Investors B, you can compare the effects of market volatilities on NXG NextGen and Federated Investors 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 Federated Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and Federated Investors.
Diversification Opportunities for NXG NextGen and Federated Investors
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NXG and Federated is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Federated Investors B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Investors 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 Federated Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Investors has no effect on the direction of NXG NextGen i.e., NXG NextGen and Federated Investors go up and down completely randomly.
Pair Corralation between NXG NextGen and Federated Investors
Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 0.96 times more return on investment than Federated Investors. However, NXG NextGen Infrastructure is 1.04 times less risky than Federated Investors. It trades about 0.5 of its potential returns per unit of risk. Federated Investors B is currently generating about 0.26 per unit of risk. If you would invest 4,350 in NXG NextGen Infrastructure on August 27, 2024 and sell it today you would earn a total of 597.00 from holding NXG NextGen Infrastructure or generate 13.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXG NextGen Infrastructure vs. Federated Investors B
Performance |
| Timeline |
| NXG NextGen Infrastr |
| Federated Investors |
NXG NextGen and Federated Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXG NextGen and Federated Investors
The main advantage of trading using opposite NXG NextGen and Federated Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, Federated Investors 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 Federated Investors will offset losses from the drop in Federated Investors' long position.| NXG NextGen vs. PowerUp Acquisition Corp | NXG NextGen vs. Aurora Innovation | NXG NextGen vs. HUMANA INC | NXG NextGen vs. Aquagold International |
| Federated Investors vs. Federated Premier Municipal | Federated Investors vs. Blackrock Muniyield | Federated Investors vs. Diamond Hill Investment | Federated Investors vs. NXG NextGen Infrastructure |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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