Correlation Between NeXGold Mining and Winpak

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

Diversification Opportunities for NeXGold Mining and Winpak

-0.46

Correlation Coefficient

NeXGold Mining  Winpak

Very good diversification

The 3 months correlation between NeXGold and Winpak is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining Corp and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak 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 Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of NeXGold Mining i.e., NeXGold Mining and Winpak go up and down completely randomly.

Pair Corralation between NeXGold Mining and Winpak

Assuming the 90 days trading horizon NeXGold Mining Corp is expected to generate 1.75 times more return on investment than Winpak. However, NeXGold Mining is 1.75 times more volatile than Winpak. It trades about 0.01 of its potential returns per unit of risk. Winpak is currently generating about -0.13 per unit of risk. If you would invest  66.00  in NeXGold Mining Corp on September 25, 2024 and sell it today you would earn a total of  0.00  from holding NeXGold Mining Corp or generate 0.0% return on investment over 90 days.

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

NeXGold Mining Corp  vs.  Winpak

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.

Winpak

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Winpak may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NeXGold Mining and Winpak

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

The idea behind NeXGold Mining Corp and Winpak 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.