Correlation Between NextSource Materials and Precious Metals
Can any of the company-specific risk be diversified away by investing in both NextSource Materials and Precious Metals 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 NextSource Materials and Precious Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextSource Materials and Precious Metals And, you can compare the effects of market volatilities on NextSource Materials and Precious Metals 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 NextSource Materials with a short position of Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and Precious Metals.
Diversification Opportunities for NextSource Materials and Precious Metals
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NextSource and Precious is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And and NextSource Materials 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 NextSource Materials are associated (or correlated) with Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of NextSource Materials i.e., NextSource Materials and Precious Metals go up and down completely randomly.
Pair Corralation between NextSource Materials and Precious Metals
Assuming the 90 days trading horizon NextSource Materials is expected to generate 3.54 times more return on investment than Precious Metals. However, NextSource Materials is 3.54 times more volatile than Precious Metals And. It trades about 0.18 of its potential returns per unit of risk. Precious Metals And is currently generating about -0.06 per unit of risk. If you would invest 66.00 in NextSource Materials on October 17, 2024 and sell it today you would earn a total of 13.00 from holding NextSource Materials or generate 19.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextSource Materials vs. Precious Metals And
Performance |
| Timeline |
| NextSource Materials |
| Precious Metals And |
NextSource Materials and Precious Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextSource Materials and Precious Metals
The main advantage of trading using opposite NextSource Materials and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextSource Materials position performs unexpectedly, Precious Metals 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 Precious Metals will offset losses from the drop in Precious Metals' long position.| NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Northern Graphite | NextSource Materials vs. Lomiko Metals | NextSource Materials vs. Elcora Advanced Materials |
| Precious Metals vs. Atrium Mortgage Investment | Precious Metals vs. Primaris Retail RE | Precious Metals vs. Micron Technology, | Precious Metals vs. NextSource Materials |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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