Correlation Between New Energy and Nevada Sunrise

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Can any of the company-specific risk be diversified away by investing in both New Energy and Nevada Sunrise 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 New Energy and Nevada Sunrise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Energy Metals and Nevada Sunrise Gold, you can compare the effects of market volatilities on New Energy and Nevada Sunrise 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 New Energy with a short position of Nevada Sunrise. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Energy and Nevada Sunrise.

Diversification Opportunities for New Energy and Nevada Sunrise

NewNevadaDiversified AwayNewNevadaDiversified Away100%
-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between New and Nevada is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding New Energy Metals and Nevada Sunrise Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada Sunrise Gold and New Energy 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 New Energy Metals are associated (or correlated) with Nevada Sunrise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada Sunrise Gold has no effect on the direction of New Energy i.e., New Energy and Nevada Sunrise go up and down completely randomly.

Pair Corralation between New Energy and Nevada Sunrise

Assuming the 90 days horizon New Energy Metals is expected to under-perform the Nevada Sunrise. In addition to that, New Energy is 4.93 times more volatile than Nevada Sunrise Gold. It trades about -0.22 of its total potential returns per unit of risk. Nevada Sunrise Gold is currently generating about 0.11 per unit of volatility. If you would invest  1.00  in Nevada Sunrise Gold on November 22, 2024 and sell it today you would earn a total of  0.08  from holding Nevada Sunrise Gold or generate 8.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

New Energy Metals  vs.  Nevada Sunrise Gold

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 02004006008001,000
JavaScript chart by amCharts 3.21.15NRGYF NVSGF
       Timeline  
New Energy Metals 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in New Energy Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, New Energy reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.025000000000000030.050.10.150.20.250.3
Nevada Sunrise Gold 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Nevada Sunrise Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Nevada Sunrise may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.0080.010.0120.0140.0160.0180.02

New Energy and Nevada Sunrise Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-413.38-309.6-205.82-102.050.16105.35214.34323.32432.31541.29 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15NRGYF NVSGF
       Returns  

Pair Trading with New Energy and Nevada Sunrise

The main advantage of trading using opposite New Energy and Nevada Sunrise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Energy position performs unexpectedly, Nevada Sunrise 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 Nevada Sunrise will offset losses from the drop in Nevada Sunrise's long position.
The idea behind New Energy Metals and Nevada Sunrise 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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