Correlation Between NexGen Energy and IA Clarington
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and IA Clarington 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 IA Clarington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and IA Clarington Strategic, you can compare the effects of market volatilities on NexGen Energy and IA Clarington 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 IA Clarington. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and IA Clarington.
Diversification Opportunities for NexGen Energy and IA Clarington
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NexGen and ISIF is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and IA Clarington Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Strategic 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 IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Strategic has no effect on the direction of NexGen Energy i.e., NexGen Energy and IA Clarington go up and down completely randomly.
Pair Corralation between NexGen Energy and IA Clarington
Assuming the 90 days trading horizon NexGen Energy is expected to generate 5.75 times more return on investment than IA Clarington. However, NexGen Energy is 5.75 times more volatile than IA Clarington Strategic. It trades about 0.07 of its potential returns per unit of risk. IA Clarington Strategic is currently generating about 0.06 per unit of risk. If you would invest 568.00 in NexGen Energy on August 25, 2024 and sell it today you would earn a total of 674.00 from holding NexGen Energy or generate 118.66% 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. IA Clarington Strategic
Performance |
| Timeline |
| NexGen Energy |
| IA Clarington Strategic |
NexGen Energy and IA Clarington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and IA Clarington
The main advantage of trading using opposite NexGen Energy and IA Clarington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, IA Clarington 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 IA Clarington will offset losses from the drop in IA Clarington'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 |
| IA Clarington vs. Global Atomic Corp | IA Clarington vs. enCore Energy Corp | IA Clarington vs. Fission Uranium Corp | IA Clarington 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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