Correlation Between NXG NextGen and Eaton Vance

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

Diversification Opportunities for NXG NextGen and Eaton Vance

0.81

Correlation Coefficient

NXG NextGen  Eaton Vance

Very poor diversification

The 3 months correlation between NXG and Eaton is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Eaton Vance Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Floating 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Floating has no effect on the direction of NXG NextGen i.e., NXG NextGen and Eaton Vance go up and down completely randomly.

Pair Corralation between NXG NextGen and Eaton Vance

Considering the 90-day investment horizon NXG NextGen Infrastructure is expected to generate 2.26 times more return on investment than Eaton Vance. However, NXG NextGen is 2.26 times more volatile than Eaton Vance Floating. It trades about 0.27 of its potential returns per unit of risk. Eaton Vance Floating is currently generating about 0.12 per unit of risk. If you would invest  3,334  in NXG NextGen Infrastructure on February 22, 2024 and sell it today you would earn a total of  824.00  from holding NXG NextGen Infrastructure or generate 24.72% return on investment over 90 days.

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

NXG NextGen Infrastructure  vs.  Eaton Vance Floating

NXG NextGen Infrastr

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NXG NextGen Infrastructure are ranked lower than 21 (%) 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.

Eaton Vance Floating

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Floating are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Eaton Vance is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NXG NextGen and Eaton Vance

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

The idea behind NXG NextGen Infrastructure and Eaton Vance Floating 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.