Correlation Between NexGen Energy and NEO PERFORMMAT

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

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

Diversification Opportunities for NexGen Energy and NEO PERFORMMAT

-0.38

Correlation Coefficient

NexGen Energy  NEO PERFORMMAT

Very good diversification

The 3 months correlation between NexGen and NEO is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and NEO PERFORMMAT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEO PERFORMMAT 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 NEO PERFORMMAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEO PERFORMMAT has no effect on the direction of NexGen Energy i.e., NexGen Energy and NEO PERFORMMAT go up and down completely randomly.

Pair Corralation between NexGen Energy and NEO PERFORMMAT

Assuming the 90 days horizon NexGen Energy is expected to generate 1.44 times more return on investment than NEO PERFORMMAT. However, NexGen Energy is 1.44 times more volatile than NEO PERFORMMAT. It trades about 0.18 of its potential returns per unit of risk. NEO PERFORMMAT is currently generating about -0.16 per unit of risk. If you would invest  636.00  in NexGen Energy on February 8, 2024 and sell it today you would earn a total of  173.00  from holding NexGen Energy or generate 27.2% 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.  NEO PERFORMMAT

NexGen Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NexGen Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NexGen Energy reported solid returns over the last few months and may actually be approaching a breakup point.

NEO PERFORMMAT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEO PERFORMMAT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NexGen Energy and NEO PERFORMMAT

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

The idea behind NexGen Energy and NEO PERFORMMAT 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..