Correlation Between NexGen Energy and Anfield Resources
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Anfield Resources 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 NexGen Energy and Anfield Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Anfield Resources, you can compare the effects of market volatilities on NexGen Energy and Anfield Resources 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 NexGen Energy with a short position of Anfield Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Anfield Resources.
Diversification Opportunities for NexGen Energy and Anfield Resources
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NexGen and Anfield is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources and NexGen Energy 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 NexGen Energy are associated (or correlated) with Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of NexGen Energy i.e., NexGen Energy and Anfield Resources go up and down completely randomly.
Pair Corralation between NexGen Energy and Anfield Resources
Assuming the 90 days horizon NexGen Energy is expected to generate 0.33 times more return on investment than Anfield Resources. However, NexGen Energy is 3.0 times less risky than Anfield Resources. It trades about 0.14 of its potential returns per unit of risk. Anfield Resources is currently generating about 0.03 per unit of risk. If you would invest 670.00 in NexGen Energy on September 13, 2024 and sell it today you would earn a total of 80.00 from holding NexGen Energy or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexGen Energy vs. Anfield Resources
Performance |
| Timeline |
| NexGen Energy |
| Anfield Resources |
NexGen Energy and Anfield Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and Anfield Resources
The main advantage of trading using opposite NexGen Energy and Anfield Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Anfield Resources 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 Anfield Resources will offset losses from the drop in Anfield Resources' long position.| NexGen Energy vs. Food Life Companies | NexGen Energy vs. Austevoll Seafood ASA | NexGen Energy vs. Cogent Communications Holdings | NexGen Energy vs. Shenandoah Telecommunications |
| Anfield Resources vs. Lion One Metals | Anfield Resources vs. Aegean Airlines SA | Anfield Resources vs. Singapore Airlines Limited | Anfield Resources vs. Gol Intelligent Airlines |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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