Correlation Between Laramide Resources and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Laramide 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 Laramide 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 Laramide Resources and NexGen Energy, you can compare the effects of market volatilities on Laramide 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 Laramide Resources with a short position of NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laramide Resources and NexGen Energy.
Diversification Opportunities for Laramide Resources and NexGen Energy
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Laramide and NexGen is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Laramide Resources and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy and Laramide 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 Laramide 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 Laramide Resources i.e., Laramide Resources and NexGen Energy go up and down completely randomly.
Pair Corralation between Laramide Resources and NexGen Energy
Assuming the 90 days horizon Laramide Resources is expected to under-perform the NexGen Energy. In addition to that, Laramide Resources is 1.44 times more volatile than NexGen Energy. It trades about -0.01 of its total potential returns per unit of risk. NexGen Energy is currently generating about 0.04 per unit of volatility. If you would invest 750.00 in NexGen Energy on September 1, 2024 and sell it today you would earn a total of 94.00 from holding NexGen Energy or generate 12.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Laramide Resources vs. NexGen Energy
Performance |
| Timeline |
| Laramide Resources |
| NexGen Energy |
Laramide Resources and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laramide Resources and NexGen Energy
The main advantage of trading using opposite Laramide Resources and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laramide 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.| Laramide Resources vs. Baselode Energy Corp | Laramide Resources vs. Elevate Uranium | Laramide Resources vs. Isoenergy | Laramide Resources vs. Anfield Resources |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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