Correlation Between Western Investment and NeXGold Mining
Can any of the company-specific risk be diversified away by investing in both Western Investment 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 Western Investment and NeXGold Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and NeXGold Mining Corp, you can compare the effects of market volatilities on Western Investment 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 Western Investment with a short position of NeXGold Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and NeXGold Mining.
Diversification Opportunities for Western Investment and NeXGold Mining
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and NeXGold is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment 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 Western Investment 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 Western Investment 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 Western Investment i.e., Western Investment and NeXGold Mining go up and down completely randomly.
Pair Corralation between Western Investment and NeXGold Mining
Given the investment horizon of 90 days Western Investment is expected to generate 0.96 times more return on investment than NeXGold Mining. However, Western Investment is 1.04 times less risky than NeXGold Mining. It trades about -0.02 of its potential returns per unit of risk. NeXGold Mining Corp is currently generating about -0.08 per unit of risk. If you would invest 51.00 in Western Investment on August 24, 2024 and sell it today you would lose (9.00) from holding Western Investment or give up 17.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. NeXGold Mining Corp
Performance |
| Timeline |
| Western Investment |
| NeXGold Mining Corp |
Western Investment and NeXGold Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and NeXGold Mining
The main advantage of trading using opposite Western Investment and NeXGold Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment 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.| Western Investment vs. Waste Connections | Western Investment vs. CCL Industries | Western Investment vs. iShares Canadian HYBrid | Western Investment vs. Solar Alliance Energy |
| NeXGold Mining vs. Agnico Eagle Mines | NeXGold Mining vs. Barrick Gold Corp | NeXGold Mining vs. Wheaton Precious Metals | NeXGold Mining vs. Kinross Gold 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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