Correlation Between Nexus Gold and Lavras Gold

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

By analyzing existing cross correlation between Nexus Gold Corp and Lavras Gold Corp, you can compare the effects of market volatilities on Nexus Gold and Lavras Gold 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 Nexus Gold with a short position of Lavras Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexus Gold and Lavras Gold.

Diversification Opportunities for Nexus Gold and Lavras Gold

0.32

Correlation Coefficient

Nexus Gold  Lavras Gold

Weak diversification

The 3 months correlation between Nexus and Lavras is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nexus Gold Corp and Lavras Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lavras Gold Corp and Nexus Gold 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 Nexus Gold Corp are associated (or correlated) with Lavras Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lavras Gold Corp has no effect on the direction of Nexus Gold i.e., Nexus Gold and Lavras Gold go up and down completely randomly.

Pair Corralation between Nexus Gold and Lavras Gold

If you would invest  165.00  in Lavras Gold Corp on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Lavras Gold Corp or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Nexus Gold Corp  vs.  Lavras Gold Corp

Nexus Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexus Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Nexus Gold is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Lavras Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lavras Gold Corp 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nexus Gold and Lavras Gold

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

The idea behind Nexus Gold Corp and Lavras Gold 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.