Correlation Between Dream Industrial and NeXGold Mining

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

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

Diversification Opportunities for Dream Industrial and NeXGold Mining

0.78

Correlation Coefficient

Dream Industrial  NeXGold Mining

Poor diversification

The 3 months correlation between Dream and NeXGold is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dream Industrial Real 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 Dream Industrial 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 Dream Industrial Real 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 Dream Industrial i.e., Dream Industrial and NeXGold Mining go up and down completely randomly.

Pair Corralation between Dream Industrial and NeXGold Mining

Assuming the 90 days trading horizon Dream Industrial Real is expected to generate 0.31 times more return on investment than NeXGold Mining. However, Dream Industrial Real is 3.19 times less risky than NeXGold Mining. It trades about -0.04 of its potential returns per unit of risk. NeXGold Mining Corp is currently generating about -0.03 per unit of risk. If you would invest  1,272  in Dream Industrial Real on September 27, 2024 and sell it today you would lose (83.00) from holding Dream Industrial Real or give up 6.53% of portfolio value over 90 days.

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

Dream Industrial Real  vs.  NeXGold Mining Corp

Dream Industrial Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Industrial Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company 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 abnormal 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 Dream Industrial and NeXGold Mining

The main advantage of trading using opposite Dream Industrial and NeXGold Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Industrial 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 Dream Industrial Real 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.