Correlation Between NexGen Energy and Broadcom
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Broadcom 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 Broadcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Broadcom, you can compare the effects of market volatilities on NexGen Energy and Broadcom 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 Broadcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Broadcom.
Diversification Opportunities for NexGen Energy and Broadcom
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NexGen and Broadcom is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom 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 Broadcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadcom has no effect on the direction of NexGen Energy i.e., NexGen Energy and Broadcom go up and down completely randomly.
Pair Corralation between NexGen Energy and Broadcom
Assuming the 90 days horizon NexGen Energy is expected to under-perform the Broadcom. But the stock apears to be less risky and, when comparing its historical volatility, NexGen Energy is 1.41 times less risky than Broadcom. The stock trades about -0.18 of its potential returns per unit of risk. The Broadcom is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15,757 in Broadcom on December 3, 2024 and sell it today you would earn a total of 2,249 from holding Broadcom or generate 14.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.36% |
| Values | Daily Returns |
NexGen Energy vs. Broadcom
Performance |
| Timeline |
| NexGen Energy |
| Broadcom |
NexGen Energy and Broadcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and Broadcom
The main advantage of trading using opposite NexGen Energy and Broadcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Broadcom 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 Broadcom will offset losses from the drop in Broadcom's long position.| NexGen Energy vs. JSC National Atomic | NexGen Energy vs. Ur Energy | NexGen Energy vs. URANIUM ROYALTY P | NexGen Energy vs. Bannerman Resources Limited |
| Broadcom vs. Singapore Telecommunications Limited | Broadcom vs. De Grey Mining | Broadcom vs. Computer And Technologies | Broadcom vs. Ribbon Communications |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |