Correlation Between Transalta and NeXGold Mining
Can any of the company-specific risk be diversified away by investing in both Transalta 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 Transalta and NeXGold Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transalta A Cum and NeXGold Mining Corp, you can compare the effects of market volatilities on Transalta 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 Transalta with a short position of NeXGold Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transalta and NeXGold Mining.
Diversification Opportunities for Transalta and NeXGold Mining
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transalta and NeXGold is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Transalta A Cum 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 Transalta 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 Transalta A Cum 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 Transalta i.e., Transalta and NeXGold Mining go up and down completely randomly.
Pair Corralation between Transalta and NeXGold Mining
Assuming the 90 days trading horizon Transalta is expected to generate 3.06 times less return on investment than NeXGold Mining. But when comparing it to its historical volatility, Transalta A Cum is 6.7 times less risky than NeXGold Mining. It trades about 0.61 of its potential returns per unit of risk. NeXGold Mining Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 66.00 in NeXGold Mining Corp on September 15, 2024 and sell it today you would earn a total of 10.00 from holding NeXGold Mining Corp or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Transalta A Cum vs. NeXGold Mining Corp
Performance |
| Timeline |
| Transalta A Cum |
| NeXGold Mining Corp |
Transalta and NeXGold Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transalta and NeXGold Mining
The main advantage of trading using opposite Transalta and NeXGold Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transalta 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.| Transalta vs. Brookfield Renewable Partners | Transalta vs. TransAlta Corp | Transalta vs. Capstone Infrastructure Corp | Transalta vs. Maxim Power Corp |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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