Correlation Between NexGen Energy and Global X
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Global X SPTSX, you can compare the effects of market volatilities on NexGen Energy and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Global X.
Diversification Opportunities for NexGen Energy and Global X
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NexGen and Global is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Global X SPTSX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SPTSX 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SPTSX has no effect on the direction of NexGen Energy i.e., NexGen Energy and Global X go up and down completely randomly.
Pair Corralation between NexGen Energy and Global X
Assuming the 90 days trading horizon NexGen Energy is expected to generate 3.95 times more return on investment than Global X. However, NexGen Energy is 3.95 times more volatile than Global X SPTSX. It trades about 0.06 of its potential returns per unit of risk. Global X SPTSX is currently generating about 0.11 per unit of risk. If you would invest 885.00 in NexGen Energy on August 26, 2024 and sell it today you would earn a total of 357.00 from holding NexGen Energy or generate 40.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
NexGen Energy vs. Global X SPTSX
Performance |
| Timeline |
| NexGen Energy |
| Global X SPTSX |
NexGen Energy and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and Global X
The main advantage of trading using opposite NexGen Energy and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X'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 |
| Global X vs. Global Atomic Corp | Global X vs. enCore Energy Corp | Global X vs. Fission Uranium Corp | Global X vs. NexGen Energy |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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