Correlation Between NeXGold Mining and Transatlantic Mining

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

Diversification Opportunities for NeXGold Mining and Transatlantic Mining

-0.45

Correlation Coefficient

NeXGold Mining  Transatlantic Mining

Very good diversification

The 3 months correlation between NeXGold and Transatlantic is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining Corp and Transatlantic Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transatlantic Mining Corp 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 Transatlantic Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transatlantic Mining Corp has no effect on the direction of NeXGold Mining i.e., NeXGold Mining and Transatlantic Mining go up and down completely randomly.

Pair Corralation between NeXGold Mining and Transatlantic Mining

Assuming the 90 days trading horizon NeXGold Mining Corp is expected to generate 0.6 times more return on investment than Transatlantic Mining. However, NeXGold Mining Corp is 1.66 times less risky than Transatlantic Mining. It trades about -0.12 of its potential returns per unit of risk. Transatlantic Mining Corp is currently generating about -0.3 per unit of risk. If you would invest  76.00  in NeXGold Mining Corp on October 14, 2024 and sell it today you would lose (4.00) from holding NeXGold Mining Corp or give up 5.26% of portfolio value over 90 days.

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

NeXGold Mining Corp  vs.  Transatlantic Mining Corp

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Transatlantic Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transatlantic Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Transatlantic Mining is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with NeXGold Mining and Transatlantic Mining

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

The idea behind NeXGold Mining Corp and Transatlantic Mining Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.