Correlation Between NeXGold Mining and Pollard Banknote

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

Diversification Opportunities for NeXGold Mining and Pollard Banknote

0.08

Correlation Coefficient

NeXGold Mining  Pollard Banknote

Significant diversification

The 3 months correlation between NeXGold and Pollard is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining Corp and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote 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 Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of NeXGold Mining i.e., NeXGold Mining and Pollard Banknote go up and down completely randomly.

Pair Corralation between NeXGold Mining and Pollard Banknote

Assuming the 90 days trading horizon NeXGold Mining Corp is expected to under-perform the Pollard Banknote. In addition to that, NeXGold Mining is 1.61 times more volatile than Pollard Banknote Limited. It trades about -0.01 of its total potential returns per unit of risk. Pollard Banknote Limited is currently generating about 0.04 per unit of volatility. If you would invest  1,790  in Pollard Banknote Limited on September 24, 2024 and sell it today you would earn a total of  600.00  from holding Pollard Banknote Limited or generate 33.52% 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.  Pollard Banknote Limited

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

Pollard Banknote

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Pollard Banknote Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Pollard Banknote 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 Pollard Banknote

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

The idea behind NeXGold Mining Corp and Pollard Banknote Limited 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.