Correlation Between NeXGold Mining and Fjordland Exploration

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

Diversification Opportunities for NeXGold Mining and Fjordland Exploration

-0.21

Correlation Coefficient

NeXGold Mining  Fjordland Exploration

Very good diversification

The 3 months correlation between NeXGold and Fjordland is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining Corp and Fjordland Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fjordland Exploration 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 Fjordland Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fjordland Exploration has no effect on the direction of NeXGold Mining i.e., NeXGold Mining and Fjordland Exploration go up and down completely randomly.

Pair Corralation between NeXGold Mining and Fjordland Exploration

Assuming the 90 days trading horizon NeXGold Mining is expected to generate 31.53 times less return on investment than Fjordland Exploration. But when comparing it to its historical volatility, NeXGold Mining Corp is 8.04 times less risky than Fjordland Exploration. It trades about 0.04 of its potential returns per unit of risk. Fjordland Exploration is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Fjordland Exploration on December 23, 2024 and sell it today you would earn a total of  1.00  from holding Fjordland Exploration or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

NeXGold Mining Corp  vs.  Fjordland Exploration

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 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NeXGold Mining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fjordland Exploration

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fjordland Exploration are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fjordland Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NeXGold Mining and Fjordland Exploration

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

The idea behind NeXGold Mining Corp and Fjordland Exploration 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.