Correlation Between AVITA Medical and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both AVITA Medical and NexGen 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 AVITA Medical and NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVITA Medical and NexGen Energy, you can compare the effects of market volatilities on AVITA Medical and NexGen 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 AVITA Medical with a short position of NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVITA Medical and NexGen Energy.
Diversification Opportunities for AVITA Medical and NexGen Energy
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AVITA and NexGen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding AVITA Medical and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy and AVITA Medical 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 AVITA Medical are associated (or correlated) with NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of AVITA Medical i.e., AVITA Medical and NexGen Energy go up and down completely randomly.
Pair Corralation between AVITA Medical and NexGen Energy
Assuming the 90 days trading horizon AVITA Medical is expected to generate 2.34 times less return on investment than NexGen Energy. But when comparing it to its historical volatility, AVITA Medical is 1.17 times less risky than NexGen Energy. It trades about 0.06 of its potential returns per unit of risk. NexGen Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 686.00 in NexGen Energy on September 15, 2024 and sell it today you would earn a total of 63.00 from holding NexGen Energy or generate 9.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVITA Medical vs. NexGen Energy
Performance |
| Timeline |
| AVITA Medical |
| NexGen Energy |
AVITA Medical and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVITA Medical and NexGen Energy
The main advantage of trading using opposite AVITA Medical and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVITA Medical position performs unexpectedly, NexGen 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.| AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc | AVITA Medical vs. Apple Inc |
| NexGen Energy vs. MeVis Medical Solutions | NexGen Energy vs. AVITA Medical | NexGen Energy vs. Datang International Power | NexGen Energy vs. Japan Medical Dynamic |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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