Correlation Between NexGen Energy and Income Financial
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Income Financial 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 Income Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Income Financial Trust, you can compare the effects of market volatilities on NexGen Energy and Income Financial 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 Income Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Income Financial.
Diversification Opportunities for NexGen Energy and Income Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NexGen and Income is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Income Financial Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Financial Trust 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 Income Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Financial Trust has no effect on the direction of NexGen Energy i.e., NexGen Energy and Income Financial go up and down completely randomly.
Pair Corralation between NexGen Energy and Income Financial
Assuming the 90 days trading horizon NexGen Energy is expected to generate 2.86 times more return on investment than Income Financial. However, NexGen Energy is 2.86 times more volatile than Income Financial Trust. It trades about 0.23 of its potential returns per unit of risk. Income Financial Trust is currently generating about 0.37 per unit of risk. If you would invest 1,029 in NexGen Energy on August 31, 2024 and sell it today you would earn a total of 162.00 from holding NexGen Energy or generate 15.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexGen Energy vs. Income Financial Trust
Performance |
| Timeline |
| NexGen Energy |
| Income Financial Trust |
NexGen Energy and Income Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and Income Financial
The main advantage of trading using opposite NexGen Energy and Income Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Income Financial 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 Income Financial will offset losses from the drop in Income Financial'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 |
| Income Financial vs. iShares Canadian HYBrid | Income Financial vs. Brompton European Dividend | Income Financial vs. Solar Alliance Energy | Income Financial vs. PHN Multi Style All Cap |
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 CEOs Directory module to screen CEOs from public companies around the world.
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