Correlation Between NexGen Energy and Dividend Growth
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Dividend Growth 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 NexGen Energy and Dividend Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Dividend Growth Split, you can compare the effects of market volatilities on NexGen Energy and Dividend Growth 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 NexGen Energy with a short position of Dividend Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Dividend Growth.
Diversification Opportunities for NexGen Energy and Dividend Growth
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NexGen and Dividend is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Dividend Growth Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Growth Split and NexGen Energy 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 NexGen Energy are associated (or correlated) with Dividend Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Growth Split has no effect on the direction of NexGen Energy i.e., NexGen Energy and Dividend Growth go up and down completely randomly.
Pair Corralation between NexGen Energy and Dividend Growth
Assuming the 90 days trading horizon NexGen Energy is expected to generate 3.48 times more return on investment than Dividend Growth. However, NexGen Energy is 3.48 times more volatile than Dividend Growth Split. It trades about 0.22 of its potential returns per unit of risk. Dividend Growth Split is currently generating about 0.23 per unit of risk. If you would invest 899.00 in NexGen Energy on August 27, 2024 and sell it today you would earn a total of 271.00 from holding NexGen Energy or generate 30.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexGen Energy vs. Dividend Growth Split
Performance |
| Timeline |
| NexGen Energy |
| Dividend Growth Split |
NexGen Energy and Dividend Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and Dividend Growth
The main advantage of trading using opposite NexGen Energy and Dividend Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Dividend Growth 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 Dividend Growth will offset losses from the drop in Dividend Growth's long position.| NexGen Energy vs. Fission Uranium Corp | NexGen Energy vs. Denison Mines Corp | NexGen Energy vs. Energy Fuels | NexGen Energy vs. enCore Energy Corp |
| Dividend Growth vs. Life Banc Split | Dividend Growth vs. North American Financial | Dividend Growth vs. Financial 15 Split | Dividend Growth vs. Dividend 15 Split |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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