Correlation Between Lion One and NeXGold Mining
Can any of the company-specific risk be diversified away by investing in both Lion One and NeXGold Mining 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 Lion One and NeXGold Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion One Metals and NeXGold Mining Corp, you can compare the effects of market volatilities on Lion One and NeXGold Mining 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 Lion One with a short position of NeXGold Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and NeXGold Mining.
Diversification Opportunities for Lion One and NeXGold Mining
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lion and NeXGold is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and NeXGold Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeXGold Mining Corp and Lion One 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 Lion One Metals are associated (or correlated) with NeXGold Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeXGold Mining Corp has no effect on the direction of Lion One i.e., Lion One and NeXGold Mining go up and down completely randomly.
Pair Corralation between Lion One and NeXGold Mining
Assuming the 90 days horizon Lion One Metals is expected to under-perform the NeXGold Mining. But the stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 1.12 times less risky than NeXGold Mining. The stock trades about -0.02 of its potential returns per unit of risk. The NeXGold Mining Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 128.00 in NeXGold Mining Corp on November 5, 2024 and sell it today you would lose (62.00) from holding NeXGold Mining Corp or give up 48.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. NeXGold Mining Corp
Performance |
| Timeline |
| Lion One Metals |
| NeXGold Mining Corp |
Lion One and NeXGold Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and NeXGold Mining
The main advantage of trading using opposite Lion One and NeXGold Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, NeXGold Mining 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 NeXGold Mining will offset losses from the drop in NeXGold Mining's long position.The idea behind Lion One Metals and NeXGold Mining Corp 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.| NeXGold Mining vs. Newmont Goldcorp Corp | NeXGold Mining vs. Agnico Eagle Mines | NeXGold Mining vs. Barrick Gold Corp | NeXGold Mining vs. Wheaton Precious Metals |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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