Correlation Between Bellevue Gold and Norsemont Mining
Can any of the company-specific risk be diversified away by investing in both Bellevue Gold and Norsemont Mining 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 Bellevue Gold and Norsemont Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bellevue Gold Limited and Norsemont Mining, you can compare the effects of market volatilities on Bellevue Gold and Norsemont Mining 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 Bellevue Gold with a short position of Norsemont Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bellevue Gold and Norsemont Mining.
Diversification Opportunities for Bellevue Gold and Norsemont Mining
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bellevue and Norsemont is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bellevue Gold Limited and Norsemont Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsemont Mining and Bellevue 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 Bellevue Gold Limited are associated (or correlated) with Norsemont Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsemont Mining has no effect on the direction of Bellevue Gold i.e., Bellevue Gold and Norsemont Mining go up and down completely randomly.
Pair Corralation between Bellevue Gold and Norsemont Mining
Assuming the 90 days horizon Bellevue Gold Limited is expected to under-perform the Norsemont Mining. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bellevue Gold Limited is 1.81 times less risky than Norsemont Mining. The pink sheet trades about -0.26 of its potential returns per unit of risk. The Norsemont Mining is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Norsemont Mining on September 1, 2024 and sell it today you would lose (2.00) from holding Norsemont Mining or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Bellevue Gold Limited vs. Norsemont Mining
Performance |
| Timeline |
| Bellevue Gold Limited |
| Norsemont Mining |
Bellevue Gold and Norsemont Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bellevue Gold and Norsemont Mining
The main advantage of trading using opposite Bellevue Gold and Norsemont Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bellevue Gold position performs unexpectedly, Norsemont Mining 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 Norsemont Mining will offset losses from the drop in Norsemont Mining's long position.| Bellevue Gold vs. Aurion Resources | Bellevue Gold vs. Rio2 Limited | Bellevue Gold vs. Palamina Corp | Bellevue Gold vs. BTU Metals Corp |
| Norsemont Mining vs. Aurion Resources | Norsemont Mining vs. Rio2 Limited | Norsemont Mining vs. Palamina Corp | Norsemont Mining vs. BTU Metals Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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