Correlation Between Bannerman Resources and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Bannerman Resources 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 Bannerman Resources and NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bannerman Resources and NexGen Energy, you can compare the effects of market volatilities on Bannerman Resources 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 Bannerman Resources with a short position of NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bannerman Resources and NexGen Energy.
Diversification Opportunities for Bannerman Resources and NexGen Energy
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bannerman and NexGen is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bannerman Resources and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy and Bannerman Resources 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 Bannerman Resources 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 Bannerman Resources i.e., Bannerman Resources and NexGen Energy go up and down completely randomly.
Pair Corralation between Bannerman Resources and NexGen Energy
Assuming the 90 days horizon Bannerman Resources is expected to under-perform the NexGen Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Bannerman Resources is 1.13 times less risky than NexGen Energy. The otc stock trades about -0.14 of its potential returns per unit of risk. The NexGen Energy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 750.00 in NexGen Energy on August 30, 2024 and sell it today you would earn a total of 81.00 from holding NexGen Energy or generate 10.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bannerman Resources vs. NexGen Energy
Performance |
| Timeline |
| Bannerman Resources |
| NexGen Energy |
Bannerman Resources and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bannerman Resources and NexGen Energy
The main advantage of trading using opposite Bannerman Resources and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bannerman Resources 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.| Bannerman Resources vs. GoviEx Uranium | Bannerman Resources vs. Paladin Energy | Bannerman Resources vs. Peninsula Energy | Bannerman Resources vs. Baselode Energy Corp |
| NexGen Energy vs. Energy Fuels | NexGen Energy vs. Uranium Energy Corp | NexGen Energy vs. Cameco Corp | NexGen Energy vs. Ur Energy |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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