Correlation Between Largo Physical and Nexa Resources
Can any of the company-specific risk be diversified away by investing in both Largo Physical and Nexa Resources 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 Largo Physical and Nexa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Largo Physical Vanadium and Nexa Resources SA, you can compare the effects of market volatilities on Largo Physical and Nexa Resources 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 Largo Physical with a short position of Nexa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Largo Physical and Nexa Resources.
Diversification Opportunities for Largo Physical and Nexa Resources
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Largo and Nexa is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Largo Physical Vanadium and Nexa Resources SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexa Resources SA and Largo Physical 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 Largo Physical Vanadium are associated (or correlated) with Nexa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexa Resources SA has no effect on the direction of Largo Physical i.e., Largo Physical and Nexa Resources go up and down completely randomly.
Pair Corralation between Largo Physical and Nexa Resources
Assuming the 90 days horizon Largo Physical Vanadium is expected to under-perform the Nexa Resources. In addition to that, Largo Physical is 1.55 times more volatile than Nexa Resources SA. It trades about -0.05 of its total potential returns per unit of risk. Nexa Resources SA is currently generating about 0.01 per unit of volatility. If you would invest 643.00 in Nexa Resources SA on November 1, 2024 and sell it today you would lose (14.00) from holding Nexa Resources SA or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 87.63% |
| Values | Daily Returns |
Largo Physical Vanadium vs. Nexa Resources SA
Performance |
| Timeline |
| Largo Physical Vanadium |
| Nexa Resources SA |
Largo Physical and Nexa Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Largo Physical and Nexa Resources
The main advantage of trading using opposite Largo Physical and Nexa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Largo Physical position performs unexpectedly, Nexa Resources 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 Nexa Resources will offset losses from the drop in Nexa Resources' long position.| Largo Physical vs. Embotelladora Andina SA | Largo Physical vs. Embotelladora Andina SA | Largo Physical vs. Apple Rush | Largo Physical vs. Alkame Holdings |
| Nexa Resources vs. Materion | Nexa Resources vs. Fury Gold Mines | Nexa Resources vs. Eskay Mining Corp | Nexa Resources vs. EMX Royalty 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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