Correlation Between Stepstone and NXG NextGen
Can any of the company-specific risk be diversified away by investing in both Stepstone and NXG NextGen 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 Stepstone and NXG NextGen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and NXG NextGen Infrastructure, you can compare the effects of market volatilities on Stepstone and NXG NextGen 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 Stepstone with a short position of NXG NextGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and NXG NextGen.
Diversification Opportunities for Stepstone and NXG NextGen
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Stepstone and NXG is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and NXG NextGen Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXG NextGen Infrastr and Stepstone 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 Stepstone Group are associated (or correlated) with NXG NextGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXG NextGen Infrastr has no effect on the direction of Stepstone i.e., Stepstone and NXG NextGen go up and down completely randomly.
Pair Corralation between Stepstone and NXG NextGen
Given the investment horizon of 90 days Stepstone Group is expected to generate 1.02 times more return on investment than NXG NextGen. However, Stepstone is 1.02 times more volatile than NXG NextGen Infrastructure. It trades about 0.1 of its potential returns per unit of risk. NXG NextGen Infrastructure is currently generating about 0.06 per unit of risk. If you would invest 2,679 in Stepstone Group on August 27, 2024 and sell it today you would earn a total of 4,026 from holding Stepstone Group or generate 150.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. NXG NextGen Infrastructure
Performance |
| Timeline |
| Stepstone Group |
| NXG NextGen Infrastr |
Stepstone and NXG NextGen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and NXG NextGen
The main advantage of trading using opposite Stepstone and NXG NextGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, NXG NextGen 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 NXG NextGen will offset losses from the drop in NXG NextGen's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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