Correlation Between NXG NextGen and Apollo Global

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

Diversification Opportunities for NXG NextGen and Apollo Global

0.61

Correlation Coefficient

NXG NextGen  Apollo Global

Poor diversification

The 3 months correlation between NXG and Apollo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NXG NextGen Infrastructure and Apollo Global Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Global Management 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 Apollo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Global Management has no effect on the direction of NXG NextGen i.e., NXG NextGen and Apollo Global go up and down completely randomly.

Pair Corralation between NXG NextGen and Apollo Global

Considering the 90-day investment horizon NXG NextGen is expected to generate 1.37 times less return on investment than Apollo Global. But when comparing it to its historical volatility, NXG NextGen Infrastructure is 1.17 times less risky than Apollo Global. It trades about 0.1 of its potential returns per unit of risk. Apollo Global Management is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9,406  in Apollo Global Management on October 10, 2024 and sell it today you would earn a total of  6,792  from holding Apollo Global Management or generate 72.21% return on investment over 90 days.

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

NXG NextGen Infrastructure  vs.  Apollo Global Management

NXG NextGen Infrastr

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NXG NextGen Infrastructure are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, NXG NextGen may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Apollo Global Management

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Global Management are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Apollo Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NXG NextGen and Apollo Global

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

The idea behind NXG NextGen Infrastructure and Apollo Global Management 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.