Correlation Between Eskay Mining and Novo Resources
Can any of the company-specific risk be diversified away by investing in both Eskay Mining and Novo Resources 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 Eskay Mining and Novo Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eskay Mining Corp and Novo Resources Corp, you can compare the effects of market volatilities on Eskay Mining and Novo Resources 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 Eskay Mining with a short position of Novo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eskay Mining and Novo Resources.
Diversification Opportunities for Eskay Mining and Novo Resources
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eskay and Novo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and Novo Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novo Resources Corp and Eskay Mining 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 Eskay Mining Corp are associated (or correlated) with Novo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novo Resources Corp has no effect on the direction of Eskay Mining i.e., Eskay Mining and Novo Resources go up and down completely randomly.
Pair Corralation between Eskay Mining and Novo Resources
Assuming the 90 days horizon Eskay Mining Corp is expected to under-perform the Novo Resources. But the stock apears to be less risky and, when comparing its historical volatility, Eskay Mining Corp is 1.38 times less risky than Novo Resources. The stock trades about -0.09 of its potential returns per unit of risk. The Novo Resources Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Novo Resources Corp on October 20, 2024 and sell it today you would earn a total of 1.50 from holding Novo Resources Corp or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eskay Mining Corp vs. Novo Resources Corp
Performance |
| Timeline |
| Eskay Mining Corp |
| Novo Resources Corp |
Eskay Mining and Novo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eskay Mining and Novo Resources
The main advantage of trading using opposite Eskay Mining and Novo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eskay Mining position performs unexpectedly, Novo Resources 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 Novo Resources will offset losses from the drop in Novo Resources' long position.| Eskay Mining vs. Grande Portage Resources | Eskay Mining vs. Strikepoint Gold | Eskay Mining vs. Blackrock Silver Corp | Eskay Mining vs. American Creek Resources |
| Novo Resources vs. Lion One Metals | Novo Resources vs. New Found Gold | Novo Resources vs. Eskay Mining Corp | Novo Resources vs. Labrador Gold 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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