Correlation Between NEXA RESOURCES and Westwater Resources
Can any of the company-specific risk be diversified away by investing in both NEXA RESOURCES and Westwater Resources 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 NEXA RESOURCES and Westwater Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXA RESOURCES SA and Westwater Resources, you can compare the effects of market volatilities on NEXA RESOURCES and Westwater Resources 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 NEXA RESOURCES with a short position of Westwater Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXA RESOURCES and Westwater Resources.
Diversification Opportunities for NEXA RESOURCES and Westwater Resources
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NEXA and Westwater is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NEXA RESOURCES SA and Westwater Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwater Resources and NEXA 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 NEXA RESOURCES SA are associated (or correlated) with Westwater Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwater Resources has no effect on the direction of NEXA RESOURCES i.e., NEXA RESOURCES and Westwater Resources go up and down completely randomly.
Pair Corralation between NEXA RESOURCES and Westwater Resources
Assuming the 90 days horizon NEXA RESOURCES SA is expected to generate 0.55 times more return on investment than Westwater Resources. However, NEXA RESOURCES SA is 1.81 times less risky than Westwater Resources. It trades about 0.24 of its potential returns per unit of risk. Westwater Resources is currently generating about 0.09 per unit of risk. If you would invest 705.00 in NEXA RESOURCES SA on September 20, 2024 and sell it today you would earn a total of 80.00 from holding NEXA RESOURCES SA or generate 11.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXA RESOURCES SA vs. Westwater Resources
Performance |
| Timeline |
| NEXA RESOURCES SA |
| Westwater Resources |
NEXA RESOURCES and Westwater Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXA RESOURCES and Westwater Resources
The main advantage of trading using opposite NEXA RESOURCES and Westwater Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXA RESOURCES position performs unexpectedly, Westwater Resources 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 Westwater Resources will offset losses from the drop in Westwater Resources' long position.| NEXA RESOURCES vs. American Lithium Corp | NEXA RESOURCES vs. ADRIATIC METALS LS 013355 | NEXA RESOURCES vs. Superior Plus Corp | NEXA RESOURCES vs. SIVERS SEMICONDUCTORS AB |
| Westwater Resources vs. Zoom Video Communications | Westwater Resources vs. CHINA TELECOM H | Westwater Resources vs. Natural Health Trends | Westwater Resources vs. SHIP HEALTHCARE HLDGINC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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