Correlation Between NovaGold Resources and Centerra Gold
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Centerra Gold 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 NovaGold Resources and Centerra Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Centerra Gold, you can compare the effects of market volatilities on NovaGold Resources and Centerra Gold 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 NovaGold Resources with a short position of Centerra Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Centerra Gold.
Diversification Opportunities for NovaGold Resources and Centerra Gold
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NovaGold and Centerra is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Centerra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerra Gold and NovaGold Resources 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 NovaGold Resources are associated (or correlated) with Centerra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerra Gold has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Centerra Gold go up and down completely randomly.
Pair Corralation between NovaGold Resources and Centerra Gold
Assuming the 90 days horizon NovaGold Resources is expected to under-perform the Centerra Gold. In addition to that, NovaGold Resources is 1.2 times more volatile than Centerra Gold. It trades about -0.01 of its total potential returns per unit of risk. Centerra Gold is currently generating about 0.04 per unit of volatility. If you would invest 651.00 in Centerra Gold on August 24, 2024 and sell it today you would earn a total of 221.00 from holding Centerra Gold or generate 33.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. Centerra Gold
Performance |
| Timeline |
| NovaGold Resources |
| Centerra Gold |
NovaGold Resources and Centerra Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Centerra Gold
The main advantage of trading using opposite NovaGold Resources and Centerra Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Centerra Gold 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 Centerra Gold will offset losses from the drop in Centerra Gold's long position.| NovaGold Resources vs. Rainy Mountain Royalty | NovaGold Resources vs. Plato Gold Corp | NovaGold Resources vs. Rochester Resources | NovaGold Resources vs. Forstrong Global Income |
| Centerra Gold vs. Alamos Gold | Centerra Gold vs. NovaGold Resources | Centerra Gold vs. Eldorado Gold Corp | Centerra Gold vs. IAMGold |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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