Correlation Between NexGen Energy and Isoenergy

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

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

Diversification Opportunities for NexGen Energy and Isoenergy

0.93

Correlation Coefficient

NexGen Energy  Isoenergy

Almost no diversification

The 3 months correlation between NexGen and Isoenergy is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and Isoenergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isoenergy 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 Isoenergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isoenergy has no effect on the direction of NexGen Energy i.e., NexGen Energy and Isoenergy go up and down completely randomly.

Pair Corralation between NexGen Energy and Isoenergy

Considering the 90-day investment horizon NexGen Energy is expected to under-perform the Isoenergy. But the stock apears to be less risky and, when comparing its historical volatility, NexGen Energy is 1.08 times less risky than Isoenergy. The stock trades about -0.39 of its potential returns per unit of risk. The Isoenergy is currently generating about -0.34 of returns per unit of risk over similar time horizon. If you would invest  184.00  in Isoenergy on December 4, 2024 and sell it today you would lose (43.00) from holding Isoenergy or give up 23.37% of portfolio value over 90 days.

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

NexGen Energy  vs.  Isoenergy

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Isoenergy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Isoenergy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NexGen Energy and Isoenergy

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

The idea behind NexGen Energy and Isoenergy 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.