Correlation Between AGF Management and Nexus Gold

Can any of the company-specific risk be diversified away by investing in both AGF Management and Nexus Gold 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 AGF Management and Nexus Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGF Management Limited and Nexus Gold Corp, you can compare the effects of market volatilities on AGF Management and Nexus Gold 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 AGF Management with a short position of Nexus Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Nexus Gold.

Diversification Opportunities for AGF Management and Nexus Gold

0.01

Correlation Coefficient

AGF Management  Nexus Gold

Significant diversification

The 3 months correlation between AGF and Nexus is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Nexus Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexus Gold Corp and AGF Management 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 AGF Management Limited are associated (or correlated) with Nexus Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexus Gold Corp has no effect on the direction of AGF Management i.e., AGF Management and Nexus Gold go up and down completely randomly.

Pair Corralation between AGF Management and Nexus Gold

Assuming the 90 days trading horizon AGF Management Limited is expected to under-perform the Nexus Gold. But the stock apears to be less risky and, when comparing its historical volatility, AGF Management Limited is 16.67 times less risky than Nexus Gold. The stock trades about -0.03 of its potential returns per unit of risk. The Nexus Gold Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Nexus Gold Corp on December 20, 2024 and sell it today you would earn a total of  0.50  from holding Nexus Gold Corp or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AGF Management Limited  vs.  Nexus Gold Corp

AGF Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGF Management Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AGF Management is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Nexus Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nexus Gold Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nexus Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGF Management and Nexus Gold

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

The idea behind AGF Management Limited and Nexus Gold Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..