Correlation Between NexGen Energy and Fission Uranium

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

By analyzing existing cross correlation between NexGen Energy and Fission Uranium Corp, you can compare the effects of market volatilities on NexGen Energy and Fission Uranium 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 Fission Uranium. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and Fission Uranium.

Diversification Opportunities for NexGen Energy and Fission Uranium

0.2

Correlation Coefficient

NexGen Energy  Fission Uranium

Modest diversification

The 3 months correlation between NexGen and Fission is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Fission Uranium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fission Uranium Corp 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 Fission Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fission Uranium Corp has no effect on the direction of NexGen Energy i.e., NexGen Energy and Fission Uranium go up and down completely randomly.

Pair Corralation between NexGen Energy and Fission Uranium

Assuming the 90 days trading horizon NexGen Energy is expected to generate 0.57 times more return on investment than Fission Uranium. However, NexGen Energy is 1.75 times less risky than Fission Uranium. It trades about 0.28 of its potential returns per unit of risk. Fission Uranium Corp is currently generating about 0.01 per unit of risk. If you would invest  743.00  in NexGen Energy on September 3, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

NexGen Energy  vs.  Fission Uranium Corp

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.

Fission Uranium Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fission Uranium Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Fission Uranium is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NexGen Energy and Fission Uranium

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

The idea behind NexGen Energy and Fission Uranium 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.