Correlation Between NexGen Energy and Isoenergy
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Isoenergy 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 Isoenergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Isoenergy, you can compare the effects of market volatilities on NexGen Energy and Isoenergy 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 Isoenergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Isoenergy.
Diversification Opportunities for NexGen Energy and Isoenergy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NexGen and Isoenergy is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Isoenergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isoenergy 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 Isoenergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isoenergy has no effect on the direction of NexGen Energy i.e., NexGen Energy and Isoenergy go up and down completely randomly.
Pair Corralation between NexGen Energy and Isoenergy
Considering the 90-day investment horizon NexGen Energy is expected to generate 0.83 times more return on investment than Isoenergy. However, NexGen Energy is 1.21 times less risky than Isoenergy. It trades about 0.06 of its potential returns per unit of risk. Isoenergy is currently generating about 0.02 per unit of risk. If you would invest 413.00 in NexGen Energy on August 29, 2024 and sell it today you would earn a total of 418.00 from holding NexGen Energy or generate 101.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NexGen Energy vs. Isoenergy
Performance |
| Timeline |
| NexGen Energy |
| Isoenergy |
NexGen Energy and Isoenergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NexGen Energy and Isoenergy
The main advantage of trading using opposite NexGen Energy and Isoenergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Isoenergy 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 Isoenergy will offset losses from the drop in Isoenergy's long position.| NexGen Energy vs. Energy Fuels | NexGen Energy vs. Uranium Energy Corp | NexGen Energy vs. Cameco Corp | NexGen Energy vs. Ur Energy |
| Isoenergy vs. Petroleo Brasileiro Petrobras | Isoenergy vs. Equinor ASA ADR | Isoenergy vs. Eni SpA ADR | Isoenergy vs. YPF Sociedad Anonima |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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