Correlation Between Ngx Energy and Prairie Provident

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

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

Diversification Opportunities for Ngx Energy and Prairie Provident

0.51

Correlation Coefficient

Ngx Energy  Prairie Provident

Very weak diversification

The 3 months correlation between Ngx and Prairie is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ngx Energy International and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident and Ngx 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 Ngx Energy International are associated (or correlated) with Prairie Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Provident has no effect on the direction of Ngx Energy i.e., Ngx Energy and Prairie Provident go up and down completely randomly.

Pair Corralation between Ngx Energy and Prairie Provident

Assuming the 90 days trading horizon Ngx Energy International is expected to generate 0.45 times more return on investment than Prairie Provident. However, Ngx Energy International is 2.2 times less risky than Prairie Provident. It trades about 0.04 of its potential returns per unit of risk. Prairie Provident Resources is currently generating about 0.02 per unit of risk. If you would invest  77.00  in Ngx Energy International on October 11, 2024 and sell it today you would earn a total of  30.00  from holding Ngx Energy International or generate 38.96% return on investment over 90 days.

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

Ngx Energy International  vs.  Prairie Provident Resources

Ngx Energy International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ngx Energy International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Ngx Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Prairie Provident

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prairie Provident Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Prairie Provident displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ngx Energy and Prairie Provident

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

The idea behind Ngx Energy International and Prairie Provident Resources 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.