Correlation Between NexGen Energy and Invesco SP
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Invesco SP 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 Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Invesco SP 500, you can compare the effects of market volatilities on NexGen Energy and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Invesco SP.
Diversification Opportunities for NexGen Energy and Invesco SP
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NexGen and Invesco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of NexGen Energy i.e., NexGen Energy and Invesco SP go up and down completely randomly.
Pair Corralation between NexGen Energy and Invesco SP
Assuming the 90 days trading horizon NexGen Energy is expected to generate 4.19 times more return on investment than Invesco SP. However, NexGen Energy is 4.19 times more volatile than Invesco SP 500. It trades about 0.28 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.12 per unit of risk. If you would invest 1,058 in NexGen Energy on August 27, 2024 and sell it today you would earn a total of 184.00 from holding NexGen Energy or generate 17.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
NexGen Energy vs. Invesco SP 500
Performance |
| Timeline |
| NexGen Energy |
| Invesco SP 500 |
NexGen Energy and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and Invesco SP
The main advantage of trading using opposite NexGen Energy and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Invesco SP 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 Invesco SP will offset losses from the drop in Invesco SP'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 |
| Invesco SP vs. Global Atomic Corp | Invesco SP vs. enCore Energy Corp | Invesco SP vs. Fission Uranium Corp | Invesco SP 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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