Correlation Between Paladin Energy and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Paladin Energy and NexGen Energy 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 Paladin Energy and NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paladin Energy and NexGen Energy, you can compare the effects of market volatilities on Paladin Energy and NexGen Energy 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 Paladin Energy with a short position of NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paladin Energy and NexGen Energy.
Diversification Opportunities for Paladin Energy and NexGen Energy
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Paladin and NexGen is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Paladin Energy and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy and Paladin 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 Paladin Energy are associated (or correlated) with NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of Paladin Energy i.e., Paladin Energy and NexGen Energy go up and down completely randomly.
Pair Corralation between Paladin Energy and NexGen Energy
Assuming the 90 days horizon Paladin Energy is expected to under-perform the NexGen Energy. In addition to that, Paladin Energy is 2.35 times more volatile than NexGen Energy. It trades about -0.26 of its total potential returns per unit of risk. NexGen Energy is currently generating about 0.25 per unit of volatility. If you would invest 757.00 in NexGen Energy on August 25, 2024 and sell it today you would earn a total of 131.00 from holding NexGen Energy or generate 17.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Paladin Energy vs. NexGen Energy
Performance |
| Timeline |
| Paladin Energy |
| NexGen Energy |
Paladin Energy and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paladin Energy and NexGen Energy
The main advantage of trading using opposite Paladin Energy and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paladin Energy position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.| Paladin Energy vs. Mega Uranium | Paladin Energy vs. Laramide Resources | Paladin Energy vs. Deep Yellow | Paladin Energy vs. Bannerman Resources |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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