Correlation Between NexGen Energy and Sprott
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Sprott 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 Sprott into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Sprott Inc, you can compare the effects of market volatilities on NexGen Energy and Sprott 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 Sprott. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Sprott.
Diversification Opportunities for NexGen Energy and Sprott
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NexGen and Sprott is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Sprott Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Inc 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 Sprott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Inc has no effect on the direction of NexGen Energy i.e., NexGen Energy and Sprott go up and down completely randomly.
Pair Corralation between NexGen Energy and Sprott
Assuming the 90 days trading horizon NexGen Energy is expected to under-perform the Sprott. In addition to that, NexGen Energy is 1.61 times more volatile than Sprott Inc. It trades about -0.28 of its total potential returns per unit of risk. Sprott Inc is currently generating about -0.04 per unit of volatility. If you would invest 6,099 in Sprott Inc on September 20, 2024 and sell it today you would lose (95.00) from holding Sprott Inc or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NexGen Energy vs. Sprott Inc
Performance |
| Timeline |
| NexGen Energy |
| Sprott Inc |
NexGen Energy and Sprott Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and Sprott
The main advantage of trading using opposite NexGen Energy and Sprott positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Sprott 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 Sprott will offset losses from the drop in Sprott'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 |
| Sprott vs. Berkshire Hathaway CDR | Sprott vs. E L Financial Corp | Sprott vs. E L Financial 3 | Sprott vs. Molson Coors Canada |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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