Correlation Between NexGen Energy and Power Financial
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Power 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 Power 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 Power Financial Corp, you can compare the effects of market volatilities on NexGen Energy and Power 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 Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Power Financial.
Diversification Opportunities for NexGen Energy and Power Financial
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NexGen and Power is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Power Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial Corp 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 Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial Corp has no effect on the direction of NexGen Energy i.e., NexGen Energy and Power Financial go up and down completely randomly.
Pair Corralation between NexGen Energy and Power Financial
Assuming the 90 days trading horizon NexGen Energy is expected to under-perform the Power Financial. In addition to that, NexGen Energy is 8.44 times more volatile than Power Financial Corp. It trades about -0.06 of its total potential returns per unit of risk. Power Financial Corp is currently generating about 0.03 per unit of volatility. If you would invest 2,447 in Power Financial Corp on November 9, 2024 and sell it today you would earn a total of 7.00 from holding Power Financial Corp or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NexGen Energy vs. Power Financial Corp
Performance |
| Timeline |
| NexGen Energy |
| Power Financial Corp |
NexGen Energy and Power Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and Power Financial
The main advantage of trading using opposite NexGen Energy and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Power 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 Power Financial will offset losses from the drop in Power Financial's long position.| NexGen Energy vs. Denison Mines Corp | NexGen Energy vs. Energy Fuels | NexGen Energy vs. enCore Energy Corp |
| Power Financial vs. E L Financial 3 | Power Financial vs. Advent Wireless | Power Financial vs. Canlan Ice Sports | Power Financial vs. TGS Esports |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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