Correlation Between NovaGold Resources and Erdene Resource
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Erdene Resource 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 Erdene Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Erdene Resource Development, you can compare the effects of market volatilities on NovaGold Resources and Erdene Resource 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 Erdene Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Erdene Resource.
Diversification Opportunities for NovaGold Resources and Erdene Resource
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NovaGold and Erdene is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Erdene Resource Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erdene Resource Deve 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 Erdene Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erdene Resource Deve has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Erdene Resource go up and down completely randomly.
Pair Corralation between NovaGold Resources and Erdene Resource
Assuming the 90 days horizon NovaGold Resources is expected to generate 1.1 times more return on investment than Erdene Resource. However, NovaGold Resources is 1.1 times more volatile than Erdene Resource Development. It trades about 0.13 of its potential returns per unit of risk. Erdene Resource Development is currently generating about -0.05 per unit of risk. If you would invest 466.00 in NovaGold Resources on September 12, 2024 and sell it today you would earn a total of 32.00 from holding NovaGold Resources or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NovaGold Resources vs. Erdene Resource Development
Performance |
| Timeline |
| NovaGold Resources |
| Erdene Resource Deve |
NovaGold Resources and Erdene Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Erdene Resource
The main advantage of trading using opposite NovaGold Resources and Erdene Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Erdene Resource 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 Erdene Resource will offset losses from the drop in Erdene Resource's long position.| NovaGold Resources vs. Centerra Gold | NovaGold Resources vs. Alamos Gold | NovaGold Resources vs. MAG Silver Corp | NovaGold Resources vs. Seabridge Gold |
| Erdene Resource vs. Kore Mining | Erdene Resource vs. Canagold Resources | Erdene Resource vs. Grande Portage Resources | Erdene Resource vs. Bluestone Resources |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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