Correlation Between NexGen Energy and Harvest Energy
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Harvest 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 NexGen Energy and Harvest Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Harvest Energy Leaders, you can compare the effects of market volatilities on NexGen Energy and Harvest 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 NexGen Energy with a short position of Harvest Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Harvest Energy.
Diversification Opportunities for NexGen Energy and Harvest Energy
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NexGen and Harvest is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Harvest Energy Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Energy Leaders 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 Harvest Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Energy Leaders has no effect on the direction of NexGen Energy i.e., NexGen Energy and Harvest Energy go up and down completely randomly.
Pair Corralation between NexGen Energy and Harvest Energy
Assuming the 90 days trading horizon NexGen Energy is expected to generate 2.06 times more return on investment than Harvest Energy. However, NexGen Energy is 2.06 times more volatile than Harvest Energy Leaders. It trades about 0.04 of its potential returns per unit of risk. Harvest Energy Leaders is currently generating about -0.02 per unit of risk. If you would invest 1,062 in NexGen Energy on August 29, 2024 and sell it today you would earn a total of 103.00 from holding NexGen Energy or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.0% |
| Values | Daily Returns |
NexGen Energy vs. Harvest Energy Leaders
Performance |
| Timeline |
| NexGen Energy |
| Harvest Energy Leaders |
NexGen Energy and Harvest Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and Harvest Energy
The main advantage of trading using opposite NexGen Energy and Harvest Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Harvest 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 Harvest Energy will offset losses from the drop in Harvest Energy'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 |
| Harvest Energy vs. iShares SPTSX 60 | Harvest Energy vs. iShares Core SP | Harvest Energy vs. iShares Core SPTSX | Harvest Energy vs. BMO Aggregate Bond |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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