Correlation Between Prospector Metals and NRG Energy
Can any of the company-specific risk be diversified away by investing in both Prospector Metals and NRG 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 Prospector Metals and NRG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospector Metals Corp and NRG Energy, you can compare the effects of market volatilities on Prospector Metals and NRG 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 Prospector Metals with a short position of NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospector Metals and NRG Energy.
Diversification Opportunities for Prospector Metals and NRG Energy
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prospector and NRG is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Prospector Metals Corp and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy and Prospector Metals 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 Prospector Metals Corp are associated (or correlated) with NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of Prospector Metals i.e., Prospector Metals and NRG Energy go up and down completely randomly.
Pair Corralation between Prospector Metals and NRG Energy
Assuming the 90 days horizon Prospector Metals Corp is expected to under-perform the NRG Energy. In addition to that, Prospector Metals is 1.04 times more volatile than NRG Energy. It trades about -0.17 of its total potential returns per unit of risk. NRG Energy is currently generating about 0.06 per unit of volatility. If you would invest 9,266 in NRG Energy on September 13, 2024 and sell it today you would earn a total of 282.00 from holding NRG Energy or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prospector Metals Corp vs. NRG Energy
Performance |
| Timeline |
| Prospector Metals Corp |
| NRG Energy |
Prospector Metals and NRG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prospector Metals and NRG Energy
The main advantage of trading using opposite Prospector Metals and NRG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospector Metals position performs unexpectedly, NRG 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 NRG Energy will offset losses from the drop in NRG Energy's long position.| Prospector Metals vs. PVH Corp | Prospector Metals vs. Boot Barn Holdings | Prospector Metals vs. Burlington Stores | Prospector Metals vs. Lululemon Athletica |
| NRG Energy vs. AGL Energy | NRG Energy vs. Aquagold International | NRG Energy vs. Thrivent High Yield | NRG Energy vs. Morningstar Unconstrained Allocation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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