Correlation Between Pinetree Capital and NXG NextGen

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

By analyzing existing cross correlation between Pinetree Capital and NXG NextGen Infrastructure, you can compare the effects of market volatilities on Pinetree Capital and NXG NextGen 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 Pinetree Capital with a short position of NXG NextGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinetree Capital and NXG NextGen.

Diversification Opportunities for Pinetree Capital and NXG NextGen

0.72

Correlation Coefficient

Pinetree Capital  NXG NextGen

Poor diversification

The 3 months correlation between Pinetree and NXG is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pinetree Capital and NXG NextGen Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXG NextGen Infrastr and Pinetree Capital 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 Pinetree Capital are associated (or correlated) with NXG NextGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXG NextGen Infrastr has no effect on the direction of Pinetree Capital i.e., Pinetree Capital and NXG NextGen go up and down completely randomly.

Pair Corralation between Pinetree Capital and NXG NextGen

Assuming the 90 days horizon Pinetree Capital is expected to generate 1.92 times more return on investment than NXG NextGen. However, Pinetree Capital is 1.92 times more volatile than NXG NextGen Infrastructure. It trades about 0.14 of its potential returns per unit of risk. NXG NextGen Infrastructure is currently generating about 0.07 per unit of risk. If you would invest  438.00  in Pinetree Capital on September 29, 2024 and sell it today you would earn a total of  325.00  from holding Pinetree Capital or generate 74.2% return on investment over 90 days.

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

Pinetree Capital  vs.  NXG NextGen Infrastructure

Pinetree Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pinetree Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Pinetree Capital reported solid returns over the last few months and may actually be approaching a breakup point.

NXG NextGen Infrastr

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NXG NextGen Infrastructure are ranked lower than 5 (%) 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 January 2025.

Pair Trading with Pinetree Capital and NXG NextGen

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

The idea behind Pinetree Capital and NXG NextGen Infrastructure 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.