Correlation Between ProAssurance and Ngx Energy

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

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

Diversification Opportunities for ProAssurance and Ngx Energy

-0.15

Correlation Coefficient

ProAssurance  Ngx Energy

Good diversification

The 3 months correlation between ProAssurance and Ngx is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding ProAssurance and Ngx Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngx Energy International and ProAssurance 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 ProAssurance are associated (or correlated) with Ngx Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngx Energy International has no effect on the direction of ProAssurance i.e., ProAssurance and Ngx Energy go up and down completely randomly.

Pair Corralation between ProAssurance and Ngx Energy

Considering the 90-day investment horizon ProAssurance is expected to generate 2.12 times more return on investment than Ngx Energy. However, ProAssurance is 2.12 times more volatile than Ngx Energy International. It trades about 0.12 of its potential returns per unit of risk. Ngx Energy International is currently generating about -0.08 per unit of risk. If you would invest  1,586  in ProAssurance on December 21, 2024 and sell it today you would earn a total of  716.00  from holding ProAssurance or generate 45.15% return on investment over 90 days.

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

ProAssurance  vs.  Ngx Energy International

ProAssurance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProAssurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ProAssurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Ngx Energy International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ngx Energy International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ProAssurance and Ngx Energy

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

The idea behind ProAssurance and Ngx Energy International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.