Correlation Between NexGen Energy and TDb Split

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

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

Diversification Opportunities for NexGen Energy and TDb Split

0.43

Correlation Coefficient

NexGen Energy  TDb Split

Very weak diversification

The 3 months correlation between NexGen and TDb is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and TDb Split Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDb Split 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 TDb Split. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDb Split Corp has no effect on the direction of NexGen Energy i.e., NexGen Energy and TDb Split go up and down completely randomly.

Pair Corralation between NexGen Energy and TDb Split

Assuming the 90 days trading horizon NexGen Energy is expected to generate 0.86 times more return on investment than TDb Split. However, NexGen Energy is 1.16 times less risky than TDb Split. It trades about -0.04 of its potential returns per unit of risk. TDb Split Corp is currently generating about -0.07 per unit of risk. If you would invest  1,099  in NexGen Energy on October 21, 2024 and sell it today you would lose (107.00) from holding NexGen Energy or give up 9.74% of portfolio value over 90 days.

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

NexGen Energy  vs.  TDb Split Corp

NexGen Energy

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

TDb Split Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TDb Split Corp 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 fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with NexGen Energy and TDb Split

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

The idea behind NexGen Energy and TDb Split 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.