Correlation Between Lion One and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Lion One 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 Lion One and NexGen Energy 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 NexGen Energy, you can compare the effects of market volatilities on Lion One 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 Lion One with a short position of NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and NexGen Energy.
Diversification Opportunities for Lion One and NexGen Energy
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and NexGen is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 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 Lion One i.e., Lion One and NexGen Energy go up and down completely randomly.
Pair Corralation between Lion One and NexGen Energy
Assuming the 90 days horizon Lion One Metals is expected to under-perform the NexGen Energy. But the stock apears to be less risky and, when comparing its historical volatility, Lion One Metals is 1.02 times less risky than NexGen Energy. The stock trades about -0.16 of its potential returns per unit of risk. The NexGen Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 679.00 in NexGen Energy on September 12, 2024 and sell it today you would earn a total of 106.00 from holding NexGen Energy or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lion One Metals vs. NexGen Energy
Performance |
| Timeline |
| Lion One Metals |
| NexGen Energy |
Lion One and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and NexGen Energy
The main advantage of trading using opposite Lion One and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One 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.| Lion One vs. Franco Nevada | Lion One vs. Superior Plus Corp | Lion One vs. SIVERS SEMICONDUCTORS AB | Lion One vs. Norsk Hydro ASA |
| NexGen Energy vs. CyberArk Software | NexGen Energy vs. Magic Software Enterprises | NexGen Energy vs. Quaker Chemical | NexGen Energy vs. Siamgas And Petrochemicals |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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