Correlation Between NXG NextGen and Visa
Can any of the company-specific risk be diversified away by investing in both NXG NextGen and Visa 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 Visa 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 Visa Class A, you can compare the effects of market volatilities on NXG NextGen and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and Visa.
Diversification Opportunities for NXG NextGen and Visa
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NXG and Visa is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of NXG NextGen i.e., NXG NextGen and Visa go up and down completely randomly.
Pair Corralation between NXG NextGen and Visa
Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 2.14 times more return on investment than Visa. However, NXG NextGen is 2.14 times more volatile than Visa Class A. It trades about 0.57 of its potential returns per unit of risk. Visa Class A is currently generating about 0.04 per unit of risk. If you would invest 4,172 in NXG NextGen Infrastructure on October 21, 2024 and sell it today you would earn a total of 887.00 from holding NXG NextGen Infrastructure or generate 21.26% 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. Visa Class A
Performance |
Timeline |
NXG NextGen Infrastr |
Visa Class A |
NXG NextGen and Visa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NXG NextGen and Visa
The main advantage of trading using opposite NXG NextGen and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.NXG NextGen vs. MFS Investment Grade | NXG NextGen vs. Eaton Vance National | NXG NextGen vs. Nuveen California Select | NXG NextGen vs. Federated Premier Municipal |
Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data |