Correlation Between NeXGold Mining and HOME DEPOT

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

Diversification Opportunities for NeXGold Mining and HOME DEPOT

-0.17

Correlation Coefficient

NeXGold Mining  HOME DEPOT

Good diversification

The 3 months correlation between NeXGold and HOME is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining Corp and HOME DEPOT CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT CDR 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 HOME DEPOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME DEPOT CDR has no effect on the direction of NeXGold Mining i.e., NeXGold Mining and HOME DEPOT go up and down completely randomly.

Pair Corralation between NeXGold Mining and HOME DEPOT

Assuming the 90 days trading horizon NeXGold Mining Corp is expected to under-perform the HOME DEPOT. In addition to that, NeXGold Mining is 1.99 times more volatile than HOME DEPOT CDR. It trades about -0.17 of its total potential returns per unit of risk. HOME DEPOT CDR is currently generating about 0.26 per unit of volatility. If you would invest  2,543  in HOME DEPOT CDR on September 5, 2024 and sell it today you would earn a total of  227.00  from holding HOME DEPOT CDR or generate 8.93% return on investment over 90 days.

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

NeXGold Mining Corp  vs.  HOME DEPOT CDR

NeXGold Mining Corp

Risk-Adjusted Performance

1 of 100

Weak

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 newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

HOME DEPOT CDR

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HOME DEPOT CDR are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, HOME DEPOT displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NeXGold Mining and HOME DEPOT

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

The idea behind NeXGold Mining Corp and HOME DEPOT CDR 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.