Correlation Between Canadian Utilities and NeXGold Mining

Can any of the company-specific risk be diversified away by investing in both Canadian Utilities 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 Canadian Utilities and NeXGold Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Canadian Utilities and NeXGold Mining

-0.2

Correlation Coefficient

Canadian Utilities  NeXGold Mining

Good diversification

The 3 months correlation between Canadian and NeXGold is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited 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 Canadian Utilities 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 Canadian Utilities Limited 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 Canadian Utilities i.e., Canadian Utilities and NeXGold Mining go up and down completely randomly.

Pair Corralation between Canadian Utilities and NeXGold Mining

Assuming the 90 days horizon Canadian Utilities Limited is expected to under-perform the NeXGold Mining. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Utilities Limited is 3.02 times less risky than NeXGold Mining. The stock trades about -0.24 of its potential returns per unit of risk. The NeXGold Mining Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  65.00  in NeXGold Mining Corp on September 23, 2024 and sell it today you would earn a total of  3.00  from holding NeXGold Mining Corp or generate 4.62% return on investment over 90 days.

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

Canadian Utilities Limited  vs.  NeXGold Mining Corp

Canadian Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Utilities Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Canadian Utilities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

NeXGold Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeXGold Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Canadian Utilities and NeXGold Mining

The main advantage of trading using opposite Canadian Utilities and NeXGold Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities 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.

The idea behind Canadian Utilities Limited and NeXGold Mining 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.