Correlation Between Prairie Provident and NXT Energy
Can any of the company-specific risk be diversified away by investing in both Prairie Provident 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 Prairie Provident and NXT Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prairie Provident Resources and NXT Energy Solutions, you can compare the effects of market volatilities on Prairie Provident 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 Prairie Provident with a short position of NXT Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prairie Provident and NXT Energy.
Diversification Opportunities for Prairie Provident and NXT Energy
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prairie and NXT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Prairie Provident Resources 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 Prairie Provident 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 Prairie Provident Resources 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 Prairie Provident i.e., Prairie Provident and NXT Energy go up and down completely randomly.
Pair Corralation between Prairie Provident and NXT Energy
Assuming the 90 days horizon Prairie Provident Resources is expected to under-perform the NXT Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Prairie Provident Resources is 1.78 times less risky than NXT Energy. The pink sheet trades about -0.05 of its potential returns per unit of risk. The NXT Energy Solutions is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 33.00 in NXT Energy Solutions on August 13, 2025 and sell it today you would lose (2.00) from holding NXT Energy Solutions or give up 6.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prairie Provident Resources vs. NXT Energy Solutions
Performance |
| Timeline |
| Prairie Provident |
| NXT Energy Solutions |
Prairie Provident and NXT Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prairie Provident and NXT Energy
The main advantage of trading using opposite Prairie Provident and NXT Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prairie Provident 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.| Prairie Provident vs. Petro Victory Energy Corp | Prairie Provident vs. Elixir Energy Limited | Prairie Provident vs. ADX Energy | Prairie Provident vs. The Reserve Petroleum |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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