Correlation Between North American and NeXGold Mining
Can any of the company-specific risk be diversified away by investing in both North American 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 North American and NeXGold Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and NeXGold Mining Corp, you can compare the effects of market volatilities on North American 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 North American with a short position of NeXGold Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and NeXGold Mining.
Diversification Opportunities for North American and NeXGold Mining
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between North and NeXGold is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction 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 North American 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 North American Construction 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 North American i.e., North American and NeXGold Mining go up and down completely randomly.
Pair Corralation between North American and NeXGold Mining
Assuming the 90 days trading horizon North American Construction is expected to under-perform the NeXGold Mining. But the stock apears to be less risky and, when comparing its historical volatility, North American Construction is 1.38 times less risky than NeXGold Mining. The stock trades about -0.3 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 72.00 in NeXGold Mining Corp on November 7, 2024 and sell it today you would earn a total of 0.00 from holding NeXGold Mining Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. NeXGold Mining Corp
Performance |
| Timeline |
| North American Const |
| NeXGold Mining Corp |
North American and NeXGold Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and NeXGold Mining
The main advantage of trading using opposite North American and NeXGold Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American 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.| North American vs. PHX Energy Services | North American vs. CES Energy Solutions | North American vs. Total Energy Services | North American vs. Pason Systems |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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