Correlation Between Highwood Asset and NeXGold Mining

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

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

Diversification Opportunities for Highwood Asset and NeXGold Mining

0.4

Correlation Coefficient

Highwood Asset  NeXGold Mining

Very weak diversification

The 3 months correlation between Highwood and NeXGold is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management 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 Highwood Asset 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 Highwood Asset Management 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 Highwood Asset i.e., Highwood Asset and NeXGold Mining go up and down completely randomly.

Pair Corralation between Highwood Asset and NeXGold Mining

Assuming the 90 days horizon Highwood Asset Management is expected to generate 0.85 times more return on investment than NeXGold Mining. However, Highwood Asset Management is 1.18 times less risky than NeXGold Mining. It trades about -0.01 of its potential returns per unit of risk. NeXGold Mining Corp is currently generating about -0.01 per unit of risk. If you would invest  900.00  in Highwood Asset Management on December 2, 2024 and sell it today you would lose (327.00) from holding Highwood Asset Management or give up 36.33% of portfolio value over 90 days.

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

Highwood Asset Management  vs.  NeXGold Mining Corp

Highwood Asset Management

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highwood Asset Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Highwood Asset is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

NeXGold Mining Corp

Risk-Adjusted Performance

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 fairly stable basic indicators, NeXGold Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Highwood Asset and NeXGold Mining

The main advantage of trading using opposite Highwood Asset and NeXGold Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwood Asset 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 Highwood Asset Management 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.