Correlation Between NexGen Energy and Morien Resources

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

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

Diversification Opportunities for NexGen Energy and Morien Resources

-0.36

Correlation Coefficient

NexGen Energy  Morien Resources

Very good diversification

The 3 months correlation between NexGen and Morien is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Morien Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morien Resources 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 Morien Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morien Resources Corp has no effect on the direction of NexGen Energy i.e., NexGen Energy and Morien Resources go up and down completely randomly.

Pair Corralation between NexGen Energy and Morien Resources

Assuming the 90 days trading horizon NexGen Energy is expected to under-perform the Morien Resources. But the stock apears to be less risky and, when comparing its historical volatility, NexGen Energy is 1.55 times less risky than Morien Resources. The stock trades about -0.14 of its potential returns per unit of risk. The Morien Resources Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Morien Resources Corp on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Morien Resources Corp or generate 12.5% return on investment over 90 days.

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

NexGen Energy  vs.  Morien Resources Corp

NexGen Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days NexGen Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Morien Resources Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Morien Resources Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Morien Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NexGen Energy and Morien Resources

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

The idea behind NexGen Energy and Morien Resources 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.