Correlation Between NXG NextGen and Carlyle

Can any of the company-specific risk be diversified away by investing in both NXG NextGen and Carlyle 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 Carlyle 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 Carlyle Group, you can compare the effects of market volatilities on NXG NextGen and Carlyle 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 Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXG NextGen and Carlyle.

Diversification Opportunities for NXG NextGen and Carlyle

-0.54

Correlation Coefficient

NXG NextGen  Carlyle

Excellent diversification

The 3 months correlation between NXG and Carlyle is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of NXG NextGen i.e., NXG NextGen and Carlyle go up and down completely randomly.

Pair Corralation between NXG NextGen and Carlyle

Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 0.6 times more return on investment than Carlyle. However, NXG NextGen Infrastructure is 1.68 times less risky than Carlyle. It trades about 0.13 of its potential returns per unit of risk. Carlyle Group is currently generating about -0.12 per unit of risk. If you would invest  3,803  in NXG NextGen Infrastructure on March 22, 2024 and sell it today you would earn a total of  275.00  from holding NXG NextGen Infrastructure or generate 7.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NXG NextGen Infrastructure  vs.  Carlyle Group

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 fragile basic indicators, NXG NextGen may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Carlyle Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NXG NextGen and Carlyle

The main advantage of trading using opposite NXG NextGen and Carlyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXG NextGen position performs unexpectedly, Carlyle 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 Carlyle will offset losses from the drop in Carlyle's long position.

The idea behind NXG NextGen Infrastructure and Carlyle Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.