Correlation Between NextSource Materials and New Found

Can any of the company-specific risk be diversified away by investing in both NextSource Materials and New Found 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 NextSource Materials and New Found into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NextSource Materials and New Found Gold, you can compare the effects of market volatilities on NextSource Materials and New Found 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 NextSource Materials with a short position of New Found. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and New Found.

Diversification Opportunities for NextSource Materials and New Found

-0.12

Correlation Coefficient

NextSource Materials  New Found

Good diversification

The 3 months correlation between NextSource and New is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and New Found Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Found Gold and NextSource Materials 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 NextSource Materials are associated (or correlated) with New Found. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Found Gold has no effect on the direction of NextSource Materials i.e., NextSource Materials and New Found go up and down completely randomly.

Pair Corralation between NextSource Materials and New Found

Assuming the 90 days trading horizon NextSource Materials is expected to under-perform the New Found. In addition to that, NextSource Materials is 1.29 times more volatile than New Found Gold. It trades about -0.04 of its total potential returns per unit of risk. New Found Gold is currently generating about -0.03 per unit of volatility. If you would invest  515.00  in New Found Gold on October 21, 2024 and sell it today you would lose (266.00) from holding New Found Gold or give up 51.65% of portfolio value over 90 days.

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

NextSource Materials  vs.  New Found Gold

NextSource Materials

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NextSource Materials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, NextSource Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

New Found Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Found Gold 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with NextSource Materials and New Found

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

The idea behind NextSource Materials and New Found Gold 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.