Correlation Between NeXGold Mining and Automotive Finco

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

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

Diversification Opportunities for NeXGold Mining and Automotive Finco

0.03

Correlation Coefficient

NeXGold Mining  Automotive Finco

Significant diversification

The 3 months correlation between NeXGold and Automotive is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining Corp and Automotive Finco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Finco Corp and NeXGold Mining 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 NeXGold Mining Corp are associated (or correlated) with Automotive Finco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Finco Corp has no effect on the direction of NeXGold Mining i.e., NeXGold Mining and Automotive Finco go up and down completely randomly.

Pair Corralation between NeXGold Mining and Automotive Finco

Assuming the 90 days trading horizon NeXGold Mining Corp is expected to generate 0.81 times more return on investment than Automotive Finco. However, NeXGold Mining Corp is 1.24 times less risky than Automotive Finco. It trades about 0.04 of its potential returns per unit of risk. Automotive Finco Corp is currently generating about 0.0 per unit of risk. If you would invest  66.00  in NeXGold Mining Corp on December 25, 2024 and sell it today you would earn a total of  3.00  from holding NeXGold Mining Corp or generate 4.55% return on investment over 90 days.

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

NeXGold Mining Corp  vs.  Automotive Finco Corp

NeXGold Mining Corp

Risk-Adjusted Performance

Weak

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

Automotive Finco Corp

Risk-Adjusted Performance

Insignificant

Over the last 90 days Automotive Finco Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Automotive Finco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NeXGold Mining and Automotive Finco

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

The idea behind NeXGold Mining Corp and Automotive Finco 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.