Correlation Between NeXGold Mining and Labrador Iron

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

Diversification Opportunities for NeXGold Mining and Labrador Iron

0.59

Correlation Coefficient

NeXGold Mining  Labrador Iron

Very weak diversification

The 3 months correlation between NeXGold and Labrador is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining Corp and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore 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 Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of NeXGold Mining i.e., NeXGold Mining and Labrador Iron go up and down completely randomly.

Pair Corralation between NeXGold Mining and Labrador Iron

Assuming the 90 days trading horizon NeXGold Mining Corp is expected to under-perform the Labrador Iron. In addition to that, NeXGold Mining is 2.27 times more volatile than Labrador Iron Ore. It trades about -0.11 of its total potential returns per unit of risk. Labrador Iron Ore is currently generating about 0.3 per unit of volatility. If you would invest  2,895  in Labrador Iron Ore on October 26, 2024 and sell it today you would earn a total of  155.00  from holding Labrador Iron Ore or generate 5.35% return on investment over 90 days.

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

NeXGold Mining Corp  vs.  Labrador Iron Ore

NeXGold Mining Corp

Risk-Adjusted Performance

0 of 100

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Labrador Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labrador Iron Ore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Labrador Iron is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NeXGold Mining and Labrador Iron

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

The idea behind NeXGold Mining Corp and Labrador Iron Ore 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.