Correlation Between REVLTNRY CNCPT and NexGen Energy

Can any of the company-specific risk be diversified away by investing in both REVLTNRY CNCPT and NexGen 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 REVLTNRY CNCPT and NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between REVLTNRY CNCPT and NexGen Energy, you can compare the effects of market volatilities on REVLTNRY CNCPT and NexGen 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 REVLTNRY CNCPT with a short position of NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVLTNRY CNCPT and NexGen Energy.

Diversification Opportunities for REVLTNRY CNCPT and NexGen Energy

-0.41

Correlation Coefficient

REVLTNRY CNCPT  NexGen Energy

Very good diversification

The 3 months correlation between REVLTNRY and NexGen is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding REVLTNRY CNCPT and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy and REVLTNRY CNCPT 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 REVLTNRY CNCPT are associated (or correlated) with NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of REVLTNRY CNCPT i.e., REVLTNRY CNCPT and NexGen Energy go up and down completely randomly.

Pair Corralation between REVLTNRY CNCPT and NexGen Energy

Assuming the 90 days trading horizon REVLTNRY CNCPT is expected to generate 53.15 times more return on investment than NexGen Energy. However, REVLTNRY CNCPT is 53.15 times more volatile than NexGen Energy. It trades about 0.22 of its potential returns per unit of risk. NexGen Energy is currently generating about -0.15 per unit of risk. If you would invest  0.55  in REVLTNRY CNCPT on October 13, 2024 and sell it today you would lose (0.05) from holding REVLTNRY CNCPT or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

REVLTNRY CNCPT  vs.  NexGen Energy

REVLTNRY CNCPT

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in REVLTNRY CNCPT are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, REVLTNRY CNCPT exhibited solid returns over the last few months and may actually be approaching a breakup point.

NexGen Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NexGen Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NexGen Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with REVLTNRY CNCPT and NexGen Energy

The main advantage of trading using opposite REVLTNRY CNCPT and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVLTNRY CNCPT position performs unexpectedly, NexGen 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.

The idea behind REVLTNRY CNCPT and NexGen Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.