Correlation Between NovaGold Resources and Galore Resources
Can any of the company-specific risk be diversified away by investing in both NovaGold Resources and Galore 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 NovaGold Resources and Galore Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NovaGold Resources and Galore Resources, you can compare the effects of market volatilities on NovaGold Resources and Galore 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 NovaGold Resources with a short position of Galore Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaGold Resources and Galore Resources.
Diversification Opportunities for NovaGold Resources and Galore Resources
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NovaGold and Galore is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding NovaGold Resources and Galore Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galore Resources 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 Galore Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galore Resources has no effect on the direction of NovaGold Resources i.e., NovaGold Resources and Galore Resources go up and down completely randomly.
Pair Corralation between NovaGold Resources and Galore Resources
Assuming the 90 days horizon NovaGold Resources is expected to generate 20.65 times less return on investment than Galore Resources. But when comparing it to its historical volatility, NovaGold Resources is 11.22 times less risky than Galore Resources. It trades about 0.05 of its potential returns per unit of risk. Galore Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Galore Resources on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Galore Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NovaGold Resources vs. Galore Resources
Performance |
| Timeline |
| NovaGold Resources |
| Galore Resources |
NovaGold Resources and Galore Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NovaGold Resources and Galore Resources
The main advantage of trading using opposite NovaGold Resources and Galore Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NovaGold Resources position performs unexpectedly, Galore 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 Galore Resources will offset losses from the drop in Galore Resources' long position.| NovaGold Resources vs. Centerra Gold | NovaGold Resources vs. Alamos Gold | NovaGold Resources vs. MAG Silver Corp | NovaGold Resources vs. Seabridge Gold |
| Galore Resources vs. First Majestic Silver | Galore Resources vs. Ivanhoe Energy | Galore Resources vs. Orezone Gold Corp | Galore Resources vs. Faraday Copper 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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