Correlation Between Northern Dynasty and Nouveau Monde
Can any of the company-specific risk be diversified away by investing in both Northern Dynasty and Nouveau Monde 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 Northern Dynasty and Nouveau Monde into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Dynasty Minerals and Nouveau Monde Graphite, you can compare the effects of market volatilities on Northern Dynasty and Nouveau Monde 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 Northern Dynasty with a short position of Nouveau Monde. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Dynasty and Nouveau Monde.
Diversification Opportunities for Northern Dynasty and Nouveau Monde
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northern and Nouveau is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Northern Dynasty Minerals and Nouveau Monde Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nouveau Monde Graphite and Northern Dynasty 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 Northern Dynasty Minerals are associated (or correlated) with Nouveau Monde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nouveau Monde Graphite has no effect on the direction of Northern Dynasty i.e., Northern Dynasty and Nouveau Monde go up and down completely randomly.
Pair Corralation between Northern Dynasty and Nouveau Monde
Considering the 90-day investment horizon Northern Dynasty Minerals is expected to generate 1.17 times more return on investment than Nouveau Monde. However, Northern Dynasty is 1.17 times more volatile than Nouveau Monde Graphite. It trades about 0.05 of its potential returns per unit of risk. Nouveau Monde Graphite is currently generating about -0.05 per unit of risk. If you would invest 25.00 in Northern Dynasty Minerals on August 23, 2024 and sell it today you would earn a total of 21.76 from holding Northern Dynasty Minerals or generate 87.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Dynasty Minerals vs. Nouveau Monde Graphite
Performance |
| Timeline |
| Northern Dynasty Minerals |
| Nouveau Monde Graphite |
Northern Dynasty and Nouveau Monde Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Dynasty and Nouveau Monde
The main advantage of trading using opposite Northern Dynasty and Nouveau Monde positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Dynasty position performs unexpectedly, Nouveau Monde 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 Nouveau Monde will offset losses from the drop in Nouveau Monde's long position.| Northern Dynasty vs. Vizsla Resources Corp | Northern Dynasty vs. Western Copper and | Northern Dynasty vs. Americas Silver Corp | Northern Dynasty vs. EMX Royalty Corp |
| Nouveau Monde vs. Mason Graphite | Nouveau Monde vs. Northern Graphite | Nouveau Monde vs. Graphite One | Nouveau Monde vs. Lomiko Metals |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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