Correlation Between NeXGold Mining and Enbridge Pref

Can any of the company-specific risk be diversified away by investing in both NeXGold Mining and Enbridge Pref 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 Enbridge Pref 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 Enbridge Pref L, you can compare the effects of market volatilities on NeXGold Mining and Enbridge Pref 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 Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of NeXGold Mining and Enbridge Pref.

Diversification Opportunities for NeXGold Mining and Enbridge Pref

0.07

Correlation Coefficient

NeXGold Mining  Enbridge Pref

Significant diversification

The 3 months correlation between NeXGold and Enbridge is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining Corp and Enbridge Pref L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref L 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 Enbridge Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Pref L has no effect on the direction of NeXGold Mining i.e., NeXGold Mining and Enbridge Pref go up and down completely randomly.

Pair Corralation between NeXGold Mining and Enbridge Pref

Assuming the 90 days trading horizon NeXGold Mining Corp is expected to generate 6.34 times more return on investment than Enbridge Pref. However, NeXGold Mining is 6.34 times more volatile than Enbridge Pref L. It trades about 0.02 of its potential returns per unit of risk. Enbridge Pref L is currently generating about 0.14 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  1.00  from holding NeXGold Mining Corp or generate 1.52% 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.  Enbridge Pref L

NeXGold Mining Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NeXGold Mining Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Enbridge Pref L

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref L are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Enbridge Pref is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NeXGold Mining and Enbridge Pref

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

The idea behind NeXGold Mining Corp and Enbridge Pref L 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.