Correlation Between Ainsworth Game and NRG Energy

Can any of the company-specific risk be diversified away by investing in both Ainsworth Game and NRG Energy 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 Ainsworth Game and NRG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ainsworth Game Technology and NRG Energy, you can compare the effects of market volatilities on Ainsworth Game and NRG Energy 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 Ainsworth Game with a short position of NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ainsworth Game and NRG Energy.

Diversification Opportunities for Ainsworth Game and NRG Energy

-0.47

Correlation Coefficient

Ainsworth Game  NRG Energy

Very good diversification

The 3 months correlation between Ainsworth and NRG is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy and Ainsworth Game 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 Ainsworth Game Technology are associated (or correlated) with NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and NRG Energy go up and down completely randomly.

Pair Corralation between Ainsworth Game and NRG Energy

Assuming the 90 days horizon Ainsworth Game Technology is expected to under-perform the NRG Energy. In addition to that, Ainsworth Game is 1.7 times more volatile than NRG Energy. It trades about -0.01 of its total potential returns per unit of risk. NRG Energy is currently generating about 0.03 per unit of volatility. If you would invest  9,607  in NRG Energy on October 10, 2024 and sell it today you would earn a total of  66.00  from holding NRG Energy or generate 0.69% return on investment over 90 days.

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

Ainsworth Game Technology  vs.  NRG Energy

Ainsworth Game Technology

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Ainsworth Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ainsworth Game is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NRG Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NRG Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, NRG Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ainsworth Game and NRG Energy

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

The idea behind Ainsworth Game Technology and NRG Energy 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.