Correlation Between Precision Drilling and NeXGold Mining
Can any of the company-specific risk be diversified away by investing in both Precision Drilling and NeXGold Mining 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 Precision Drilling and NeXGold Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and NeXGold Mining Corp, you can compare the effects of market volatilities on Precision Drilling and NeXGold Mining 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 Precision Drilling with a short position of NeXGold Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and NeXGold Mining.
Diversification Opportunities for Precision Drilling and NeXGold Mining
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Precision and NeXGold is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and NeXGold Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeXGold Mining Corp and Precision Drilling 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 Precision Drilling are associated (or correlated) with NeXGold Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeXGold Mining Corp has no effect on the direction of Precision Drilling i.e., Precision Drilling and NeXGold Mining go up and down completely randomly.
Pair Corralation between Precision Drilling and NeXGold Mining
Assuming the 90 days horizon Precision Drilling is expected to generate 0.56 times more return on investment than NeXGold Mining. However, Precision Drilling is 1.79 times less risky than NeXGold Mining. It trades about 0.0 of its potential returns per unit of risk. NeXGold Mining Corp is currently generating about -0.01 per unit of risk. If you would invest 10,518 in Precision Drilling on September 13, 2024 and sell it today you would lose (1,812) from holding Precision Drilling or give up 17.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. NeXGold Mining Corp
Performance |
| Timeline |
| Precision Drilling |
| NeXGold Mining Corp |
Precision Drilling and NeXGold Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and NeXGold Mining
The main advantage of trading using opposite Precision Drilling and NeXGold Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling position performs unexpectedly, NeXGold Mining 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 NeXGold Mining will offset losses from the drop in NeXGold Mining's long position.| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Ensign Energy Services | Precision Drilling vs. Calfrac Well Services | Precision Drilling vs. Birchcliff Energy |
| NeXGold Mining vs. Barrick Gold Corp | NeXGold Mining vs. Kinross Gold Corp | NeXGold Mining vs. Alamos Gold | NeXGold Mining vs. Endeavour Mining Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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