Correlation Between Monroe Capital and NXG NextGen

Can any of the company-specific risk be diversified away by investing in both Monroe Capital 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 Monroe Capital and NXG NextGen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Monroe Capital Corp and NXG NextGen Infrastructure, you can compare the effects of market volatilities on Monroe Capital 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 Monroe Capital with a short position of NXG NextGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monroe Capital and NXG NextGen.

Diversification Opportunities for Monroe Capital and NXG NextGen

0.81

Correlation Coefficient

Monroe Capital  NXG NextGen

Very poor diversification

The 3 months correlation between Monroe and NXG is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Monroe Capital Corp 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 Monroe Capital 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 Monroe Capital Corp 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 Monroe Capital i.e., Monroe Capital and NXG NextGen go up and down completely randomly.

Pair Corralation between Monroe Capital and NXG NextGen

Given the investment horizon of 90 days Monroe Capital is expected to generate 1.09 times less return on investment than NXG NextGen. But when comparing it to its historical volatility, Monroe Capital Corp is 1.51 times less risky than NXG NextGen. It trades about 0.29 of its potential returns per unit of risk. NXG NextGen Infrastructure is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,701  in NXG NextGen Infrastructure on March 19, 2024 and sell it today you would earn a total of  463.00  from holding NXG NextGen Infrastructure or generate 12.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Monroe Capital Corp  vs.  NXG NextGen Infrastructure

Monroe Capital Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monroe Capital Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Monroe Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

NXG NextGen Infrastr

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NXG NextGen Infrastructure are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, NXG NextGen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monroe Capital and NXG NextGen

The main advantage of trading using opposite Monroe Capital and NXG NextGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monroe Capital 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.

The idea behind Monroe Capital Corp and NXG NextGen Infrastructure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.