Correlation Between Nextgen and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Nextgen and Dow Jones 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 Nextgen and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextgen and Dow Jones Industrial, you can compare the effects of market volatilities on Nextgen and Dow Jones 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 Nextgen with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextgen and Dow Jones.
Diversification Opportunities for Nextgen and Dow Jones
Pay attention - limited upside
The 3 months correlation between Nextgen and Dow is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nextgen and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and 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 Nextgen are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Nextgen i.e., Nextgen and Dow Jones go up and down completely randomly.
Pair Corralation between Nextgen and Dow Jones
Assuming the 90 days trading horizon Nextgen is expected to under-perform the Dow Jones. In addition to that, Nextgen is 11.61 times more volatile than Dow Jones Industrial. It trades about -0.08 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of volatility. If you would invest 3,406,633 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,084,432 from holding Dow Jones Industrial or generate 31.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 78.23% |
| Values | Daily Returns |
Nextgen vs. Dow Jones Industrial
Performance |
| Timeline |
Nextgen and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Nextgen
Pair trading matchups for Nextgen
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Nextgen and Dow Jones
The main advantage of trading using opposite Nextgen and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextgen position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Nextgen vs. Magic Software Enterprises | Nextgen vs. Batm Advanced Communications | Nextgen vs. B Communications | Nextgen vs. Computer Direct |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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