Correlation Between Nextdecade Corp and EQT

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

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

Diversification Opportunities for Nextdecade Corp and EQT

0.95

Correlation Coefficient

Nextdecade Corp  EQT

Almost no diversification

The 3 months correlation between Nextdecade and EQT is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nextdecade Corp and EQT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT Corporation and Nextdecade Corp 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 Nextdecade Corp are associated (or correlated) with EQT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT Corporation has no effect on the direction of Nextdecade Corp i.e., Nextdecade Corp and EQT go up and down completely randomly.

Pair Corralation between Nextdecade Corp and EQT

Given the investment horizon of 90 days Nextdecade Corp is expected to generate 1.61 times more return on investment than EQT. However, Nextdecade Corp is 1.61 times more volatile than EQT Corporation. It trades about 0.19 of its potential returns per unit of risk. EQT Corporation is currently generating about 0.24 per unit of risk. If you would invest  478.00  in Nextdecade Corp on September 5, 2024 and sell it today you would earn a total of  228.00  from holding Nextdecade Corp or generate 47.7% return on investment over 90 days.

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

Nextdecade Corp  vs.  EQT Corp.

Nextdecade Corp

Risk-Adjusted Performance

15 of 100

Good

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

EQT Corporation

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EQT Corporation are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, EQT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nextdecade Corp and EQT

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

The idea behind Nextdecade Corp and EQT Corporation 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.