Correlation Between NexGen Energy and Avino Silver

Can any of the company-specific risk be diversified away by investing in both NexGen Energy and Avino Silver 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 NexGen Energy and Avino Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for NexGen Energy and Avino Silver

0.67

Correlation Coefficient

NexGen Energy  Avino Silver

Poor diversification

The 3 months correlation between NexGen and Avino is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Avino Silver Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avino Silver Gold and NexGen 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 NexGen Energy are associated (or correlated) with Avino Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avino Silver Gold has no effect on the direction of NexGen Energy i.e., NexGen Energy and Avino Silver go up and down completely randomly.

Pair Corralation between NexGen Energy and Avino Silver

Assuming the 90 days trading horizon NexGen Energy is expected to generate 0.74 times more return on investment than Avino Silver. However, NexGen Energy is 1.36 times less risky than Avino Silver. It trades about 0.29 of its potential returns per unit of risk. Avino Silver Gold is currently generating about 0.11 per unit of risk. If you would invest  743.00  in NexGen Energy on August 31, 2024 and sell it today you would earn a total of  448.00  from holding NexGen Energy or generate 60.3% return on investment over 90 days.

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

NexGen Energy  vs.  Avino Silver Gold

NexGen Energy

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NexGen Energy are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, NexGen Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Avino Silver Gold

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avino Silver Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Avino Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NexGen Energy and Avino Silver

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

The idea behind NexGen Energy and Avino Silver 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.