Correlation Between Nexus Gold and Rackla Metals

Can any of the company-specific risk be diversified away by investing in both Nexus Gold and Rackla Metals 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 Rackla Metals 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 Rackla Metals, you can compare the effects of market volatilities on Nexus Gold and Rackla Metals 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 Rackla Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexus Gold and Rackla Metals.

Diversification Opportunities for Nexus Gold and Rackla Metals

0.0

Correlation Coefficient

Nexus Gold  Rackla Metals

Pay attention - limited upside

The 3 months correlation between Nexus and Rackla is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nexus Gold Corp and Rackla Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackla Metals 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 Rackla Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackla Metals has no effect on the direction of Nexus Gold i.e., Nexus Gold and Rackla Metals go up and down completely randomly.

Pair Corralation between Nexus Gold and Rackla Metals

If you would invest  2.10  in Rackla Metals on September 4, 2024 and sell it today you would earn a total of  4.90  from holding Rackla Metals or generate 233.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Nexus Gold Corp  vs.  Rackla Metals

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Rackla Metals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rackla Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Rackla Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexus Gold and Rackla Metals

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

The idea behind Nexus Gold Corp and Rackla Metals 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.