Correlation Between Challenger Energy and NXT Energy
Can any of the company-specific risk be diversified away by investing in both Challenger Energy and NXT Energy 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 Challenger Energy and NXT Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Challenger Energy Group and NXT Energy Solutions, you can compare the effects of market volatilities on Challenger Energy and NXT Energy 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 Challenger Energy with a short position of NXT Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Challenger Energy and NXT Energy.
Diversification Opportunities for Challenger Energy and NXT Energy
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Challenger and NXT is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Challenger Energy Group and NXT Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXT Energy Solutions and Challenger 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 Challenger Energy Group are associated (or correlated) with NXT Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXT Energy Solutions has no effect on the direction of Challenger Energy i.e., Challenger Energy and NXT Energy go up and down completely randomly.
Pair Corralation between Challenger Energy and NXT Energy
Assuming the 90 days horizon Challenger Energy Group is expected to generate 0.87 times more return on investment than NXT Energy. However, Challenger Energy Group is 1.15 times less risky than NXT Energy. It trades about 0.16 of its potential returns per unit of risk. NXT Energy Solutions is currently generating about -0.16 per unit of risk. If you would invest 10.00 in Challenger Energy Group on August 15, 2025 and sell it today you would earn a total of 6.00 from holding Challenger Energy Group or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Challenger Energy Group vs. NXT Energy Solutions
Performance |
| Timeline |
| Challenger Energy |
| NXT Energy Solutions |
Challenger Energy and NXT Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Challenger Energy and NXT Energy
The main advantage of trading using opposite Challenger Energy and NXT Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Challenger Energy position performs unexpectedly, NXT Energy 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 NXT Energy will offset losses from the drop in NXT Energy's long position.| Challenger Energy vs. Altima Resources | Challenger Energy vs. CGX Energy | Challenger Energy vs. Blue Star Helium | Challenger Energy vs. Petro Matad Limited |
| NXT Energy vs. Petrofac | NXT Energy vs. Koil Energy Solutions | NXT Energy vs. Jericho Oil Corp | NXT Energy vs. Eco Oil Gas |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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