Correlation Between NXG NextGen and Stepstone
Can any of the company-specific risk be diversified away by investing in both NXG NextGen and Stepstone 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 Stepstone 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 Stepstone Group, you can compare the effects of market volatilities on NXG NextGen and Stepstone 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 Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and Stepstone.
Diversification Opportunities for NXG NextGen and Stepstone
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NXG and Stepstone is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of NXG NextGen i.e., NXG NextGen and Stepstone go up and down completely randomly.
Pair Corralation between NXG NextGen and Stepstone
Considering the 90-day investment horizon NXG NextGen is expected to generate 1.97 times less return on investment than Stepstone. But when comparing it to its historical volatility, NXG NextGen Infrastructure is 1.02 times less risky than Stepstone. It trades about 0.05 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,730 in Stepstone Group on August 24, 2024 and sell it today you would earn a total of 3,871 from holding Stepstone Group or generate 141.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXG NextGen Infrastructure vs. Stepstone Group
Performance |
| Timeline |
| NXG NextGen Infrastr |
| Stepstone Group |
NXG NextGen and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXG NextGen and Stepstone
The main advantage of trading using opposite NXG NextGen and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone'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 |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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