Correlation Between NexGen Energy and Bip Investment
Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Bip Investment 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 NexGen Energy and Bip Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NexGen Energy and Bip Investment Corp, you can compare the effects of market volatilities on NexGen Energy and Bip Investment 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 NexGen Energy with a short position of Bip Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Bip Investment.
Diversification Opportunities for NexGen Energy and Bip Investment
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NexGen and Bip is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Bip Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bip Investment Corp and NexGen Energy 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 NexGen Energy are associated (or correlated) with Bip Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bip Investment Corp has no effect on the direction of NexGen Energy i.e., NexGen Energy and Bip Investment go up and down completely randomly.
Pair Corralation between NexGen Energy and Bip Investment
Assuming the 90 days trading horizon NexGen Energy is expected to generate 2.62 times more return on investment than Bip Investment. However, NexGen Energy is 2.62 times more volatile than Bip Investment Corp. It trades about 0.2 of its potential returns per unit of risk. Bip Investment Corp is currently generating about 0.09 per unit of risk. If you would invest 752.00 in NexGen Energy on July 7, 2024 and sell it today you would earn a total of 187.00 from holding NexGen Energy or generate 24.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 97.73% |
Values | Daily Returns |
NexGen Energy vs. Bip Investment Corp
Performance |
Timeline |
NexGen Energy |
Bip Investment Corp |
NexGen Energy and Bip Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NexGen Energy and Bip Investment
The main advantage of trading using opposite NexGen Energy and Bip Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NexGen Energy position performs unexpectedly, Bip Investment 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 Bip Investment will offset losses from the drop in Bip Investment's long position.NexGen Energy vs. Fission Uranium Corp | NexGen Energy vs. Denison Mines Corp | NexGen Energy vs. Energy Fuels | NexGen Energy vs. enCore Energy 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories |