Correlation Between NXG NextGen and Western Asset
Can any of the company-specific risk be diversified away by investing in both NXG NextGen and Western Asset 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 Western Asset 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 Western Asset High, you can compare the effects of market volatilities on NXG NextGen and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and Western Asset.
Diversification Opportunities for NXG NextGen and Western Asset
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NXG and Western is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of NXG NextGen i.e., NXG NextGen and Western Asset go up and down completely randomly.
Pair Corralation between NXG NextGen and Western Asset
Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 1.45 times more return on investment than Western Asset. However, NXG NextGen is 1.45 times more volatile than Western Asset High. It trades about 0.75 of its potential returns per unit of risk. Western Asset High is currently generating about 0.05 per unit of risk. If you would invest 4,270 in NXG NextGen Infrastructure on August 30, 2024 and sell it today you would earn a total of 870.00 from holding NXG NextGen Infrastructure or generate 20.37% 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. Western Asset High
Performance |
| Timeline |
| NXG NextGen Infrastr |
| Western Asset High |
NXG NextGen and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXG NextGen and Western Asset
The main advantage of trading using opposite NXG NextGen and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Western Asset Global | Western Asset vs. Western Asset High | Western Asset vs. Voya Global Advantage | Western Asset vs. Voya Global Equity |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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